Meaning, Definitions, Features and Criticism!
Read this article to learn about the features and reasons for the emergence of monopoly in India! In the preceding section, we analysed the behaviour of a perfectly competitive market structure with very large number of small firms. Monopoly is strictly opposite to perfect competition.
Monopoly refers to a market situation where there is a single seller selling a product which has no close substitutes. For example, Railways in India. The various features of Monopoly are: Under monopoly, there is a single seller selling the product.
As a result, the monopoly firm and industry is one and the same thing and monopolist has full control over the supply and price of the product.
However, there are large numbers of buyers of monopoly product and no single buyer can influence the market price. The product produced by a monopolist has no close substitutes. So, the monopoly firm has no fear of competition from new or existing products. For example, there is no close substitute of electricity services provided by NDPL.
However, the product may have distant substitutes like inverter and generator. Restrictions on Entry and Exit: There exist strong barriers to entry of new firms and exit of existing firms.
As a result, a monopoly firm can earn abnormal profits and losses in the long run. These barriers may be due to legal restrictions like licensing or patent rights or due to restrictions created by firms in the form of cartel.
A monopolist may charge different prices for his product from different sets of consumers at the same time.
In case of monopoly, firm and industry are one and the same thing. So, firm has complete control over the industry output. As a result, monopolist is a price-maker and fixes its own price.
It can influence the market price by changing the supply of the product. Reasons for Emergence of Monopoly: A firm enjoys monopoly when it is the sole seller of its product and the product has no close substitutes.Salient Features of Monopoly Single Seller Under monopoly, there is a single producer of a particular commodity or service in the market accruing to a rather large number of buyers.
Monopoly is the term used in the context of economics, it refers to that market structure in which there are many buyers for the particular product or service but the number of sellers are limited and therefore the company enjoy monopoly.
Features of Monopoly Market. Under monopoly, the firm has full control over the supply of a product. The elasticity of demand is zero for the products.
There is a single seller or a producer of a particular product, and there is no difference between the firm and the industry. The firm is itself an industry. Features of monopoly: Single seller - under monopoly, there is a single seller selling the product, as a result, the monopoly firm and industry are one and the same thing and Monopolists has full control over the supply and price of the product.
Salient Features of Monopoly Single Seller Under monopoly, there is a single producer of a particular commodity or service in the market accruing to . 4 most features of a monopoly market.
Monopoly is an extreme form of market structure.
The word monopoly is derived from two Greek words-Mono and Poly. Mono means single and Poly means 'seller'. Thus monopoly means single seller.