Economics and monopoly introduction essay

monopoly essay topics

Essay Reducing Inequalities: Price discrimination is also beneficial to society for it helps in reducing inequalities of personal incomes when higher prices or fees are charged to the rich than to the poor. Growth of monopoly is linked with the satisfaction of the employees.

Secondly, it is not possible to find out a definite coefficient of cross-elasticity of demand in the case of any firm. Behaviour of Monopoly: How the monopoly behaves, is another factor which decides about its growth.

Characteristics of monopoly

In all cases, the above formula will give zero. Sometimes transport costs are so high that they act as a safeguard against the return of dumped goods. While it was closely related to the barriers to airline competition it uses the same ideas but provides an overview of how they seem to be working out and this was an important aspect of the monopoly vs. He cannot shift any part of it to his customers at any stage by raising the price and reducing output. Lastly, this measure is based exclusively on demand factors and neglects supply and cost conditions. The home market is controlled or protected and the foreign market is free or open. Basically, monopoly is normally characterized by the absence of competition in the market. The product has no close substitutes.

Customers do not move readily from one market to the other because of ignorance or inertia. Thus the degree of monopoly power is measured by the size of super-normal profits.

Market 1 has high elastic demand for the product and market 2 has low elastic demand. The monopolist is well aware that charging unusually high prices or earning abnormal profits would attract the attention of the government.

The provision of essential commodities or services by single public utilities may ensure high quality or convenience in the market to suit the needs of all consumers. Most of them might have conflicting interests.

Economic Welfare: Price discrimination is justified if it helps in promoting economic welfare. It is, therefore, under monopoly with no threat of entry of new firms that monopoly profits are the largest and the degree of monopoly power the absolute.

monopoly essay questions

Suppose a the government levies a specific tax which being a variable cost to the monopoly firm tends to shift the cost curves upward to AC1 and MC1.

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Definition of Monopoly Essay