![]() ![]() Stability of production elements: One of the major reasons behind the command of monopolists over resources is the non-movable nature of all elements of production. Therefore, the price decided by monopolistic will be referred to as market price. Due to the absence of competition in the market, a firm can set a higher price than what would have been charged in a competitive market. Profit maximizer: A company operating in a monopolistic market aims to maximize its profit. It signifies that a firm can generate higher profits by raising the sales level which is possible via bringing down the price of the product. ![]() He may charge different prices from different customers that are charging higher prices from rich people and low prices from poor customers.ĭownward sloping curve: Under the monopoly market, the demand curve is downward sloping. A single trader can change the price of the product without any challenge from anyone. Price discrimination: There is a high possibility of price discrimination in a monopolistic market. Monopoly traders possess a patent of that specific product under which no close substitute can be manufactured or sold by other firms in the market. Unique product: The product or service offered by a firm in a monopolistic market is unique with no close substitutes. ![]() Other companies find difficulty in entering the monopolistic market as whole production and supply of particular product comes under the control of a single supplier. The barriers involved in a monopolistic market are government licenses, copyrights and patents, resource ownership, and large startup costs. Due to the absence of competition, there is no one to challenge the price determined by the seller and therefore become the final price of the product in the market.īarrier to entry and exit: A monopoly market is characterized by a high barrier to entry/exit of new entrants. The price of the product is set by the seller himself as there is no other competitor operating in the market. Price Maker: The monopolist is the price maker being the sole king of the industry. A trader or firm from an industry with a monopoly as the whole output of the product is only dependent upon them. The whole market is regulated by individual sellers having complete influence over the supply of products. Sole Trader: A monopoly market is wholly captured by a single seller or firm which provides goods with no close substitutes at all. And if firms want to raise their sales level, then that is possible only by bringing down the price of the product. The demand curve for a monopoly market is downward sloping denoting that raising sales is the only option available to firm for increasing their profit level. He is known as ‘price-makers of the market who can alone raise or reduce the price of products without considering the competitor’s action. The monopolist sells less quantity as compared to what is sold in a perfectly competitive market but charges a higher price. Monopoly is a rare market situation where there is a single company operating and offering goods or services to people. This market is also termed as one of the extreme imperfect markets amongst monopsony, oligopoly, and monopolistic competition. Therefore, a monopolistic market is a non-competitive market with no close substitutes for the monopolist’s products. He has the power to exercise control over the whole market and determines the supply as well as the price of goods or services. The seller sells a completely unique product with restrictions on the new entry of new firms in the market. A monopoly market is a market structure that is characterized by the single seller who is called a monopolist, but there are many buyers. ![]()
0 Comments
Leave a Reply. |