Chapter 9.2, Problem 2R

To determine

To state: The characteristics of geographic, natural, government and technology monopoly.

Explanation of Solution

Geographic Monopoly:

A geographic monopoly is defined as a condition where one company carries/holds the whole market for a particular product and service. This happens because the area is so limited and the customer base is so small that there lies no point for additional sellers to enter the market because it will not generate them enough profit to survive the market.

Natural Monopoly:

A natural monopoly refers to a condition in any industry in which the infrastructural or initial capital costs are so high that it is difficult for any other supplier to enter the market. The first largest supplier has an upper-hand over potential competitors making it difficult to create space for the new entrants in the market. Electricity services are one of the instances of natural monopoly.

Government Monopoly:

In a government monopoly, the state, central or local governments are only permitted to provide certain product or service because any competitors for such good or service is legally prohibited. Highways, bridge construction are one such examples of government monopoly.

Technology Monopoly:

A technological monopoly is a condition in an industry where only one firm controls exclusive privileges over the technology to manufacture a particular product or service.

Microsoft Windows operating system is an example of technology monopoly.

Economics Concept Introduction

Introduction: Monopoly is a kind of market structure in which there exists only a single seller. There exists four types of monopoly namely: Geographic, Natural, Government and Technology