Business Enviroment

A monopoly is advantageous to the society and is encourages by the government if there are high fixed costs and very strong economies of scale. At the same time, it could also lead to unequal distribution of wealth; containment of consumer choice; lobbying and unethical spending.

Monopolies are defined as an industry dominated by one corporation, or business, like standard oil. They are a main driver of inequality, as profits concentrate more on wealth in the hands of the few.(Atlantic). A monopoly has total or nearly all control of that industry. They are considered an extreme result of the U.S. free market capitalism. The business own everything, from the goods to the supplies to the infrastructure. This company will become big enough to buy out other competitors or even crush their competitor by lowering their prices to get the other business to go out of business. They will then control the whole industry without any restarted, having the prices be what they want and the product to be in what condition they want

1) An Oligopolistic market structure is a structure where very few large businesses sell a particular standard Good or differentiated Good, and to whose market entry proves difficult. This in turn, gives little control over product pricing because of mutual interdependence (with the exception of collusion among businesses) creating a non-price competition meaning they are the ‘price setters’. A good rule to help classify an

In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge high prices.[4] Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market).[5]

Individual firm’s market share is tiny compared to the other three market powers, such as monopolistic, oligopoly, and pure monopoly. In a perfect competition system the type of products are homogenous, so each competitor would be selling the same product or service. There is also no barrier to entry so firms can enter and exit the market freely without barriers from regulation or cost.

There are only a few firms that make up this industry and they have control over the price. These companies have high barriers to entry the market. The products they produce are similar which cause competition. There is both good and bad when it comes to oligopoly and monopolies. Some good things about oligopoly are by developing product innovations and taking advantage of economies of scale. With oligopoly it is more likely to expand production capabilities, promote economic growth, and they develop change that advances the level of technology ("Oligopoly," 2000). Some bad things about oligopoly is that they tend to be inefficient in the allocation of resources and promotes the concentration of income and wealth ("Oligopoly," 2000). They charge much higher prices and end up producing less of an output than the efficiency benchmark of perfect competition. One of the good forms is natural monopoly. Natural monopoly exists when economies of scale encourage production by a single producer (Mayer). An example of this is your local electrical utility. As a power plant increases, the cost per kilowatt hour of electricity falls (Mayer). If we were to all use small generators to run our homes the cost of each household would be ridiculous. The total fixed cost of generators for the community would be high and the variable cost of running it would also be high. Another form of monopoly that is good is

By definition a Monopoly is exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices (Monopoly 2012). Individuals are often time fearful of a company or industry becoming a monopoly because it would control too much of a market share, and do whatever wants; this includes raising prices, to using excess capital to branch into even more areas (Rise of monopolies 1996). The market structure of a monopoly is characterized by; a single seller; a unique product; and impossible entry into the market (Tucker 2011). A monopoly can be a difficult thing to accomplish being that a single seller faces an entire industry demand curve due to the fact it makes up the industry as a

2 - Monopoly by definition means no competition. So, unsatisfied customers have nowhere else to take their business. Monopolies can treat their customers like scum and not lose any business. Again, they have little incentive for efficiency.

P5 - Describe how John Lewis would be influenced by economic factors in a time of economic recession and economic growth in the UK economy

There are four types of market structures: Monopolistic Competition, Monopoly, Oligopoly, and Perfect Competition. Monopolistic Competition is also known as competitive market. In this market structure, there are a large number of firms that produce similar but somewhat differentiated products for the same target customers. The market share is also divided among large number of firms making it difficult for one firm to become the market leader. On the other hand, Monopoly is a type of market structure in which only one firm controls the whole industry. There are strict barriers to entry for new firms due to governmental restrictions or the monopolistic power of the firm itself. In Oligopoly, the whole industry is dominated by a few large scale firms that set prices, introduce innovative products, and use heavy campaigns to attract buyers. All other small scale firms follow the changing market patterns set by these oligopolistic firms. Lastly, perfect competition is a market structure in which there are a larger number of firms that produce similar as well as differentiated products for

While a monopoly usually involves one firm with significant control on the market, an oligopoly contains a few firms. An oligopoly is a market structure where a few companies selling identical or differentiated products control the marketplace. The few players in an industry are usually quite large compared to the market for the product, thus giving these few players an advantage at market control. There are barriers to entry in oligopolies that include patents or government grants, ownership of resources, cost prohibitive barriers, brand equity and diminishing average cost.

At one end is perfect competition where there are very many firms competing against each other. Every firm is so tiny in relation to the entire trade that has no power to manipulate price. It is a ‘price taker’. At the other end is monopoly, where there is just a single firm in the industry, and for this reason no competition from inside the industry.

Another quality of perfect competition that may be overlooked, but is vital to this industry is the ease of entry into the market. Start-up franchises within this market structure can begin operating with relatively low initial investments (compared to other industries). This is not the case where monopolies are concerned. There are numerous barriers to entry into monopolistic market structures, capital being one of the most prominent barriers.

The markets today are so complex and deal with so many variables it can be difficult to understand just exactly how they operate. In the following I will reveal the different kinds of market structures along with their different pricing strategies. Relating to these topics, I will focus on the importance of cost, competition and customer.

One step away from perfect competition is monopolistic competition. This type of market structure has a number of different characteristics from the above. Which turn it into one of the most used market structures. In this scenario, companies are not all price takers and start making use of economies of scale in order to improve efficiency, reduce costs and increase profits. In the scenario companies sell a differentiated product at different prices. Like in perfect competition no barriers are put to entry and newcomers a constant threat to the market keeping every player always in search for a better mean to produce and compete.