MONOPOLY

INTRODUCTION CHARACTERISTICS TYPES

OF MONOPOLY SOURCES OF MONOPOLY POWER MONOPOLY VERSUS COMPETITIVE MARKET PRICE DISCRIMINATION UNDER MONOPOLY

OLIGOPOLY INTRODUCTION CHARACTERISTICS TYPES OF OLIGOPOLY MODELING DEMAND CURVES CONCULSION

monopoly means only supplier of a particular commodity. The verb "monopolize" refers to the ability to raise prices In economics, a monopoly is a single seller In a monopolistic markets, there is no competition among sellers

 Profit

Maxi miser High Barriers to Entry Single seller Price Discrimination Price maker

The following are the major types of monopoly: Absolute Monopoly: The seller has complete control over the supply of a commodity .
Relative

Monopoly: The close substitutes for a given commodity in the market are present. Monopoly : The seller finds lack of competition due to natural factors .

Natural

 Public

or Social Monopoly: Industry acquires a complete control over its market. Example raliway,post,defence product. Monopoly: power to purchase or sale of product or services to a particular individual or organization. ex. Reserve Bank of India(RBI)

Legal

There are three major types of barriers to entry economic, legal and deliberate. Economic barriers: It include economies of scale, capital requirements, cost advantages and technological superiority. Legal barriers: Legal rights can provide opportunity to monopolize the market of a good.

 Deliberate

actions: A company wanting to monopolize a market may engage in various types of deliberate action. costs: A company owning all the adjacent natural resources required for the production . space: Physical restrictions may restrict the field of operation.

Transportation

Limited

The difference between the monopoly market and competitive market are as follow: Marginal

revenue and price Product differentiation Number of competitors Barrier to entry Elasticity of Demand Excess Profits

 Price

discrimination allows a monopolist to gain more profit.

monopoly firm which adopts the policy of price discrimination is referred to as a discrimination monopoly.

 Research

and Development
of scale Competitiveness

Economies

International Monopolies

Successful Firms

INTRODUCTION When there are only a few producers there is said to be Oligopoly.
Oligopoly Oligopoly

from perfect and nonpolistic competition.

is also referred as limited completion, incomplete monopoly, multiple monopoly.

 Profit

maximization conditions Ability to set price Entry and exit Number of firms Long run profits Perfect knowledge

There are two types of Oligopoly: 1.Pure or perfect Oligopoly: Perfect Oligopoly where a few sellers produce homogenous product.
2.Imperfect or differentiated Oligopoly:Differentiated Oligopoly is a situation in between pure Oligopoly and monopolistic competition.

 Some

of the better-known models of an oligopolistic market are:Dominant firm model Cournot-Nash model Bertrand model Kinked demand model

i. ii. iii. iv.

 Dominant

firm model: The dominant firm sets prices which are simply taken by the smaller firms in determining their profit maximizing levels of production. model: The model assumes that there are two equally positioned firms; the firms compete on the basis of quantity rather than price.

Cournot-Nash

 Bertrand

model: The Bertrand model is essentially the Cournot-Nash model except the strategic variable is price rather than quantity. The model assumptions are: They produce a homogeneous product They produce at a constant marginal cost. There are two firms in the market
Kinked

demand curve model: Each firm faces a demand curve kinked at the existing price.

 Above

the kink, demand is relatively elastic. Below the kink, demand is relatively inelastic. Therefore, the best option for the oligopolist is to produce at point E which is the equilibrium point and the kink point. This is a theoretical model proposed in 1947, which has failed to receive conclusive evidence for support.

Monopoly is a market in one seller and many buyers. While oligopoly is a market in which two seller and many buyers.
Monopoly: rule by one power. Oligopoly: rule by a small group.