Pure Monopoly in a Competitive World Essay

While companies that make up an oligopoly are competitors, they are acutely aware of the processes, systems, and actions of the other companies; therefore, the decisions and actions of one company usually influence and are influenced by the actions and decisions of other companies. These decisions and actions tend to restrict and limit the goods and services that are offered and can also lead to higher prices for

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

If a monopolist makes a profit, barriers to entry will keep other firms out of the industry.

A flawlessly competitive market has several different representatives selling the exact same products. These representatives are considered to be price takers in reference to the competition. Price takers are firms that have no market power. They simply have to take the market price as given (Lumen, 2017). A monopoly starts when a single company sells a product that cannot be reproduced. Microsoft is a perfect example of a company that is seen as a monopoly due to its control of the operating systems market.

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

Practice Questions and Answers from Lesson III-3: Monopoly Practice Questions and Answers from Lesson III-3: Monopoly The following questions practice these skills:  Explain the sources of market power.  Apply the quantity and price affects on revenue of any movement along a demand curve.  Find the profit maximizing quantity and price of a single-price monopolist.  Compute deadweight loss from a single-price monopolist.  Compute marginal revenue.  Define the efficiency of P = MC.  Find the profit-maximizing quantity and price of a perfect-price-discriminating monopolist.  Find the profit-maximizing quantity and price of an imperfect-price-discriminating monopolist. Question: Each of the following firms possesses market power.

In practice, pure monopolies are very rare. For instance, a supermarket may be the only food supplier in a particular town, but if it raises its prices and retains too much of a profit, a competitor may enter the space. Even the threat of serious competition entering the market forces the existing firm to act conscionably and differently from how it would act otherwise. (Monopolies & Oligopolies) For example Wal-Mart is not only a clothing store but it also a grocery store. Another place that is similar to Wal-Mart is Meijer and Wal-Mart is significantly cheaper than Meijer this is why many people such as myself shop at Wal-Mart versus Meijer.

Oligopoly is defined as a market structure in which there are a few major firms dominating the market in an industry. One of the defining factors is that each firm explicitly feeds off of the competitors' moves and their potential responses in regard to setting prices, launching new products, etc. Under this model there is a level of implied cooperation. The firms understand that it is in their own best interests to maintain a stable price. If one of the firms subsequently lowers their prices, their competitors will do the same and knock out any advantage the original firm was hoping to gain with lower prices. However, if they raise their prices, the competitors may not do the same and can keep their prices fixed which will allow them to gain more market share.

A market is defined as an institution that brings together buyers (demanders) and sellers (suppliers) of a particular good or service. A Market structure is the relationship among the buyers and sellers of a market and how prices are determined through outside influences. There are four different types of market structures. Two on opposite extremes, and two comfortably in the middle. On one end is perfect competition, which acts as a starting point in price and output determination. Pure competition is when a large number of firms sell a standardized product, entry and exit is very easy, and an individual firm cannot control the price. On the other extreme end is Pure monopoly. A monopoly is characterized by an absence of competition, which will often allow one seller to control the market. A Pure monopoly is essentially the same thing, but also includes near impossible entry and no substitute goods. Two more common market structures are monopolistic competition and oligopoly. Monopolistic competition has a large number of sellers producing different products, while an oligopoly has only a few number of sellers producing similar products. All in all pure competition, pure monopoly, monopolistic competition, and oligopoly are all unique market structures with differing characteristics, but have one main goal, profit maximization.

Another advantage of a monopoly is that you can set the price to how high or low you’d like. Not only that, but you can make as much or as little of the product as you’d like. Monopolies can also make a huge amount of profit since no one has the same product as the monopoly so there is no competition. Monopolies can also afford to use the latest technology there is. Technology is always advancing and there are always going to be newer products that people use each time. Take a cash register for example. Cash registers used to be very low tech. It used to take a while to punch in all the numbers and use a credit/debit card, but now cash registers are fairly easy to use. Nowadays, cash registers are touch screen and the items are on the screen. It is fast, efficient, and easy to use the cash register.

However, with monopolistic competition the competition is very high especially, in restaurants due to a large number of firms that compete. There is a great variety of different foods from which to choose from. Although each firm produces a differentiated product monopolistic competition firms compete on product quality, price and marketing. In monopolistic there are fast food restaurants such as Taco Bell, Mcdonalds, KFC, and Burger King each fast food restaurant compete with offering and advertising different products to increase demand for their product. Perfect competition is more efficient because of several reasons firms maximize profit and produce on their supply curve, firms also minimize their average total cost of producing good and consumers get a real bargain and pay a price that is below the value they place on the good. I believe perfect competition is more efficient because it has more available substitutes and no firm can influence the market

A monopoly market structure is a situation in which a single company or group owns all or nearly all of the market for a given type of product or service, and in this case, it is a welfare and service orientated. To support the connection between the case and the monopoly situation, we choose three main characteristics that highlight the relation: the barriers to entry, no close substitution and have a high entry and exit barrier, profit maximizer, price maker and price

In a monopolistic market, there is more control over pricing that in a monopoly. If they raise their prices, they will only lose a small amount of customers. A monopoly is a large enough business to influence its own price, such that it is the price setter rather than taker, unlike a perfectly competitive market where each firm

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.

What is a monopoly? According to Webster's dictionary, a monopoly is "the exclusive control of a commodity or service in a given market.” Such power in the hands of a few is harmful to the public and individuals because it minimizes, if not eliminates normal competition in a given market and creates undesirable price controls. This, in turn, undermines individual enterprise and causes markets to crumble. In this paper, we will present several aspects of monopolies, including unfair competition, price control, and horizontal, vertical, and conglomerate mergers.