![]() A monopoly water company, for instance, has much more power than a monopoly train service, since in the latter case, customers may have the option of other forms of transport.Ī monopolistic market is often difficult for new firms to enter, for the following reasons: ( see also notes on 3.4.4) The power of a monopolist over the market also depends on the availability of a close substitute. For instance, ‘Facebook’ is easily the largest social media platform, although there are others. It is therefore better to think of a monopoly as a firm that dominates its market, being much bigger than its rivals. If one firm on its own has at least 25% of the market, it is considered to be a monopoly and can attract the attention of the competition watchdog. The legal definition of a monopoly focuses instead on market concentration. Where there is just one firm in the market, a pure monopoly exists. Conflicts and Trade-Offs Between Objectives and Policies.Equilibrium Levels of Real National Output.The Benefits and Costs of Economic Growth.The Characteristics of Aggregate Demand.The UK Economy - Performance and Policies.Positive and Normative Economic Statements.Alternative Views of Consumer Behaviour.Free Market Economies, Mixed Economy and Command Economy.Price, Income & Cross Elasticities of Demand.Specialisation and the Division of Labour.Introduction to Markets and Market Failure.Wage Determination in Competitive and Non-competitive Markets.Business Behaviour and the Labour Market.Factors Influencing Growth and Development.Macroeconomic Policies in a Global Context.Trading Blocs and the World Trade Organisation (WTO).Strategies Influencing Growth and Development.Government regulation can help to promote competition and prevent monopolies from becoming too powerful. Firms are inefficient if they are left unregulated: If left unregulated, monopolies may be inefficient due to lack of competition, which can lead to higher prices and reduced innovation. ![]() Non-price competition is used: Non-price competition, such as advertising or improving product quality, may be used by a monopoly to differentiate itself from potential competitors.Products sold are unique: Monopolies typically sell unique products or services that are not offered by other firms in the market. ![]() There is also no long-run adjustment like in perfect competition since a monopoly is the entire market Firms earn long-run profits: Monopolies often earn long-run profits because they do not face competition and can charge higher prices.These barriers can be economic, legal, or related to access to resources. High barriers to entry: There are high barriers to entry in a monopoly, making it difficult or impossible for other firms to enter the market.Firms are " price makers": Monopolies have the power to set prices for their products or services, rather than being subject to market forces like firms in competitive markets. ![]()
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