This type of market structure is known as an oligopoly, and it is the subject of this lecture. For example, think of the market for soda - both Pepsi and Coke are major producers, and they dominate the market. monopoly, monopolistic competition and oligopoly. However, most markets don’t fall into either category. We know that an ordinary competitive market equilibrium maximises total welfare (the shaded area in the below figure) with price equal to. Market structures may be classified as either perfect competition. In a very basic textbook model of a monopolist, FooBars criterion is a good one. Many businesses have local monopoly power, whereas others have market power at a regional or national level. Now, the answer to the question of when a monopolist is undesirable depends on the richness of the model that one has in mind. Monopoly power enjoyed by a firm depends in part on how the market is defined. The UK Competition and Markets Authority (CMA) describes a working monopoly as any firm with more than 25% of industry sales.Ī dominant firm is one which accounts for a significant share of a given market and has a significantly larger market share than its next largest rival.ĭominant firms are typically considered to have market shares of 40 per cent or more.Ī near pure monopoly occurs when one firm has a market share in excess of 90 percent.īut more realistically, a near pure monopoly can exist when one seller has more than three quarters of a market defined in a certain way. In Marxian Economics, monopoly means someone who controls the price, commodity circulation and funds to cash with strong financial resources.
Monopoly economics contitions code#
Explain and evaluate the potential costs and benefits of monopoly to both firms and consumersĪ monopoly in its purest form is when one single business dominates the whole market – it has 100% concentration. Monopoly: Economics and Monopolistic Competition Monopoly was mentioned in The Code of Hammurabi for the first time (The earliest law in the world, 1792 to 1750 B.Explain and evaluate the differences in efficiency between perfect competition and monopoly.Understand the characteristics of this model and be able to use them to explain the behaviour of firms in this market structure.What is a monopolistic market? This study note covers the essential of monopoly as a market structure.
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