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Monopoly and Monopolistic Market - Essay Example

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This paper briefly explains various features of a monopoly according to the principles of microeconomics. The author of the essay "Monopoly and Monopolistic Market" suggests that the issue of consumers protection in a monopolistic market is still not solved…
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Monopoly and Monopolistic Market
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Download file to see previous pages Monopoly has different forms like natural, geographic, technological, and government. This paper briefly explains various features of a monopoly according to the principles of microeconomics.
Monopoly is a condition in which only a single firm controls the entire market without having many competitions from others for their goods and services. It is a ploy usually adopted by big organizations to reduce competition from small firms. It is difficult for small firms to survive in monopolistic markets because of their inability to match the competitive power and financial capabilities of the monopolistic firm. Monopoly is a good market condition for an organization, but it is not so good for the consumers. The ability to fix the prices of products and services is the main advantage of a monopolistic firm. For example, Microsoft is enjoying a monopoly in the operating system market in the world at present. They are charging heavily for their Windows operating system because of the absence of any other competitive products.
Based on nature, a monopoly can be classified into different categories; natural, geographic, technological, governmental, etc. An industry is said to be a natural monopoly if it produces the desired output at a lower cost than two or more firms. Public utilities like railways, telecommunications, water services, electricity, and mail delivery, etc are examples of a natural monopoly. These public utility services are mainly controlled by the government and private competition is not allowed in these sectors. A natural monopoly and monopoly are entirely different concepts since natural monopoly describes a firm's cost structure whereas a monopoly explains market share and market power. It is difficult for small firms to invest in areas with natural monopoly. For example, it is not easy for small firms to invest huge amounts needed for setting up a public transporting system like railways or public utility like water supply. Because of globalization, governments now permit private investments in natural monopolistic areas. ...Download file to see next pagesRead More
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