Government may grant license to any one person or firm only to operate in the case of public utilities. Eg: municipal water supply and power supply by APTRANSCO. When production is solely and operated by state or government it is called public or social monopoly. When an individual or private person controls a firm it is called private monopoly. Sole producer who charges different prices: a sole producer who divides the buyers' market and charges different prices to different customersĥ) Private monopoly public or social monopoly In the case of simple monopoly, price is charged uniformly to all customers without any discrimination. No other motor company has the right to use DTS-i technology in the manufacturing of engines. And it has taken patent rights for this technology. Example Bajaj Motors Company has the technological monopoly in the DTS-i bike engine technology. Generally big forms have technological monopoly. For example, if a company develops and patents a drug to cure brain cancer, that company has a legal monopoly over that drug. Technological monopolies occur when the good or service the company provides is has legal protection in the form of a patent or copyright. Imperfect monopolist has to worry about is losing customers to producers of distantly related products. We will simply note that because the pure monopolist does not have to worry about competitors in reducing price, it can raise its price without fear that customers will not move to other producers of the same product or similar products In the case of imperfect monopoly there are close substitutes. Pure monopoly there will be a single seller of a product for which there are no close substitutes. A monopoly may also form when a company has a copyright or patent that prevents others from entering the market. Its demand curve slopes downward to the right.For example, in Saudi Arabia the government has sole control over the oil industry. He determines the price and this price will determine how much he is able to sell. The firm is the industry since it is the only producer in the market. In monopoly, there is no distinction between firm and industry. Furthermore no other seller can enter the market. State Electricity Board you travel by railway train owned and run by government of India. For example, you get your electricity supply from one agency, that is. Since the monopoly is the only seller in the market, it has neither rivals nor direct competitors. Thus, pure monopoly is market structure in which a single firm is the sole producer of a product for which there are no close substitutes. An example would be rail networks where it would make no sense for a competing firm to enter a market as it would need to build all the same infrastructure - the huge sunk cost.The term monopoly is derived from the Greek word monopolin which means exclusive sale. These are Monopolies where average costs are continually falling - usually due to huge sunk costs initially, however as firm expands marginal costs always fall. There is a special type of monopoly, called 'Natural Monopolies'. It is worth noting that not all monopolies share all common characteristics, but they experience downward sloping demand. Monopoly power is normally established and held due to barriers to entry - exmaples of which being vast economies of scale, legal barriers (such as patents), brand identity and sunk costs. Firstly that there is only one dominant firm in the market, secondly that high barriers to entry prevent new firms from entering the market and lastly that they sell differentiated products. Monopolies have three main characteristics. Monopolies are often price setters, but can be quantity setters (never both simultaneously). By technical definition a monopoly is a firm which holds 100% of a market, however in the UK the competition authorities define a legal Monopoly as a firm holding over 25% power within a market.
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