Primary characteristics of a monopoly
A single seller: For a pure monopoly to take place, a single company must provide the good or service. A company can have a monopoly on certain goods and services but not on others.
No close substitutes: A monopoly is not merely the state of having control over a product; it also means that there is no real alternative to the monopolized product.
A price maker: Because a single firm controls the total supply in a pure monopoly, it is able to exert a significant degree of control over the price by changing the quantity supplied.
In a bilateral monopoly there is both monopoly (a single seller) and monopsony (a single buyer) in the same market. A bilateral monopoly model is often used in situations where the switching costs of both sides are prohibitively high.
Bilateral monopoly situations are commonly analyzed using the theory of Nash bargaining games.
Monopoly is a market structure in which there is one seller or supplier of a commodity that has no close substitutes. This implies that the producer has control over the price ie he is a price maker while the consumer is a price taker.
In other words, the characteristics of monopoly market structure include:-
One seller or producer of the commodity in the market i.e the industry is made up of a single firm.
Production of a commodity with no close substitutes.
No free entry into the industry.
Limited advertisement, which is only informative in nature.
The firm is a price maker.
Monopolies produce at excess capacity.
Demand curve for monopoly firms is downward sloping
Note: Pure monopoly is defined as a market situation in which there is a single firm selling a commodity that has no close substitutes at all. In reality, pure monopoly may not exist.
Examples of monopoly in Uganda are Uganda Electricity board ( UEB) and Uganda railways corporation.
No close substitutes: A monopoly is not merely the state of having control over a product; it also means that there is no real alternative to the monopolized product.
A price maker: Because a single firm controls the total supply in a pure monopoly, it is able to exert a significant degree of control over the price by changing the quantity supplied.
In a bilateral monopoly there is both monopoly (a single seller) and monopsony (a single buyer) in the same market. A bilateral monopoly model is often used in situations where the switching costs of both sides are prohibitively high.
Bilateral monopoly situations are commonly analyzed using the theory of Nash bargaining games.
Monopoly is a market structure in which there is one seller or supplier of a commodity that has no close substitutes. This implies that the producer has control over the price ie he is a price maker while the consumer is a price taker.
In other words, the characteristics of monopoly market structure include:-
One seller or producer of the commodity in the market i.e the industry is made up of a single firm.
Production of a commodity with no close substitutes.
No free entry into the industry.
Limited advertisement, which is only informative in nature.
The firm is a price maker.
Monopolies produce at excess capacity.
Demand curve for monopoly firms is downward sloping
Note: Pure monopoly is defined as a market situation in which there is a single firm selling a commodity that has no close substitutes at all. In reality, pure monopoly may not exist.
Examples of monopoly in Uganda are Uganda Electricity board ( UEB) and Uganda railways corporation.