If the price is high, the firm will sell a reduced quantity in an elastic market. The implications of monopolies in terms of loss of efficiency and social welfare have been largely studied and discussed. Perfect competition assumes the environment or climate cooperates with the buildings within it. That is why, a monopolist can increase his sales only by decreasing the price of his product and thereby maximise his profit. We can distinguish different types of monopolies: : firms which have many production plants and hence different marginal cost functions will have to choose the individual output level for each plant. Monopolist is price maker and has a control over the market supply of goods. There are quite a few different market structures that can characterize an economy.
Since under oligopoly, there are a few sellers, a move by one seller immediately affects the rivals. If the oligopolist seller does not have a definite demand curve for his product, then how does he affect his sales. In this scenario, a single firm does not have any significant market power. Under this marketing setting, a firm is the price setter; however, the pricing of the product is done taking into account the elasticity of demand for the product, so that the demand for the product and profit will be maximum. A monopoly is a specific type of economic market structure. This means that no other firms produce a similar product.
He has the absolute domination over the production and supply of that good. As against this, in a monopolistic competition, there is some control over price. This market is dominated by three powerful companies: Microsoft, Sony, and Nintendo. The finally lost its monopoly status in 2006, when the market was opened up to competition. No seller has an independent price policy.
Thus there is complete interdependence among the sellers with regard to their price-output policies. Such a situation is asymmetrical. Microsoft has created monopoly power by being the first firm. Royal Mail or Patents for producing a drug. Towards this end, they act and react on the price-output movements of one another in a continuous element of uncertainty.
On the contrary, in a monopolistic competition, as the product offered by different sellers are close substitutes, and so, there is slight product differentiation. So they can enjoy monopoly power in market. This leads to the emergency of oligopoly. Thus monopolistic competition refers to competition among a large number of sellers producing close but not perfect substitutes for each other. And also in general, results for the firms will be to be better off, while it will be just the opposite for consumers. Or Pure Monopoly is a market structure where there is only one producer of a product, which has no close substitute is available.
A monopoly exists when a specific person or enterprise is the only supplier of a particular good. The area of economic welfare under perfect competition is E, F, B. Monopolistic competition The model of monopolistic competition describes a common in which firms have many competitors, but each one sells a slightly different product. Some examples are Monopoly, Oligopoly and Monopolistic competition. As firms are of small size and are capable of producing close substitutes, they can leave or enter the industry or group in the long run.
No seller by changing its price-output policy can have any perceptible effect on the sales of others and in turn be influenced by them. In this sense in pure monopoly the monopolist has supreme authority over the production and supply of a product. Advertising may also be considered wasteful, though most is informative rather than persuasive. Although the product sold by different firms in the industry remain close substitutes for the rivals, as the products are not identical but similar. The marginal revenue curve of a monopolist is below the average revenue curve and it falls faster than the average revenue curve. In these cases, the buyer tends to have more power because the business is vital to the seller. Profits in a market will attract the entry of new firms and losses lead to the exit of weak firms from the market.
It is widely believed that the costs to society arising from the existence of monopolies and monopoly power are greater than the benefits and that monopolies should be regulated. An example of monopolistic competition is the market for cereals. No seller by changing its price-output policy can have any perceptible effect on the sales of others and in turn be influenced by them. An oligopoly industry produces either a homogeneous product or heterogeneous products. So, there is fear of competition to some extent e.