Monopoly The History Behind The Property Board Game

The Standard Oil trust was dissolved into 33 smaller companies; two of its surviving “child” companies are ExxonMobil and the Chevron Corporation. The single manufacturer has the power to set the prices of its products or services. The monopolist firm (price maker) may or may not charge the same price from all its consumers. The consumers (price takers) have to accept the prices set by the firm unless the government intervenes to impose a maximum price. The arguments in favour of monopolies are largely concerned with efficiencies of scale in production. Monopolies can often lead to unfair trade practices like charging different prices from different consumers (price discrimination), setting prices far above the costs of manufacturing, selling inferior products and services, etc.

Treasure in Your Attic? Your Monopoly Set Might Be Worth a Fortune!

The Herfindahl–Hirschman Index (HHI) is sometimes used to assess how competitive an industry is. It sums up the squares of the individual market shares of all of the competitors within the market. The lower the total, the less concentrated the market and the higher the total, the more concentrated the market.83 In the US, the merger guidelines state that a post-merger HHI below 1000 is viewed as not concentrated while HHIs above that will provoke further review. In addition to barriers to entry and competition, barriers to exit may be a source of market power. Barriers to exit are market conditions that make it difficult or expensive for a company to end its involvement with a market. High liquidation costs are a primary barrier to exiting.15 Market exit and shutdown are sometimes separate events.

In this case, the publisher is using its government-granted copyright monopoly to price discriminate between the generally wealthier American economics students and the generally poorer Ethiopian economics students. Similarly, most patented medications cost more in the U.S. than in other countries with a (presumed) poorer customer base. Typically, a high general price is listed, and various market segments get varying discounts.

The offerings of such companies are unique, write the meaning of monopoly thereby eliminating competitors and the resulting conflicts. The new entrants have to face several challenges while trying to enter a monopolist market. Such challenges include high startup costs, specialized technologies, high government restrictions, complex business contracts, restricted purchase of raw materials, etc. The monopolist firm aims to maximize its profits owing to no rivalry and lack of consumer choices.

Sources of Monopoly Power

In 1903, a brilliant woman named Elizabeth Magie walked into the US Patent Office with a game-changing idea that would shake up board game history forever. A Google spokesperson claimed that the company’s tools account for £55 billion from over 700,000 businesses across the globe. Further, Google will continue to share the working of its systems with the CMA. This will sort matters for the company (Google) and address the concerns of the regulator (CMA). Sunk costs are those which cannot be retrieved in the case a firm shuts down. These are costs that are essential for the firm, like advertising costs, but cannot be recovered.

1. That is, the total profits a monopolist could earn if it sought to leverage its monopoly in one market by monopolizing a complementary market are equal to the extra profits it could earn anyway by charging more for the monopoly product itself.
2. Consumers who suspect a company is violating antitrust laws can contact the Antitrust Division or Federal Trade Commission at the federal level.
3. Sometimes, a monopolist often sets the price of its product or service just above the average cost of production of the product/service.
4. Other factors might be legal controls which restricts an undertaking in a Member States from exporting goods or services to another.
5. As a result, monopolies are characterized by a lack of competition within the market producing a good or service.

Historical monopolies

A monopoly is a market structure with a single seller or producer that assumes a dominant position in an industry or a sector. Monopolies are discouraged in free-market economies because they stifle competition, limit consumer substitutes, and thus, limit consumer choice. There are no products (or services) that match the offerings of the monopolist firm.

monopoly and competition

1. The potential entry by new firms and expansions by an undertaking must be taken into account,88 therefore the barriers to entry and barriers to expansion is an important factor here.
2. Similarly, most patented medications cost more in the U.S. than in other countries with a (presumed) poorer customer base.
3. Moreover, competitors are discouraged from entering the market often due to high initial costs.
4. The single firm, being the sole supplier, becomes synonymous with the industry.
5. We spend a lot of time researching and writing our articles and strive to provide accurate, up-to-date content.
6. The monopolist firm aims to maximize its profits owing to no rivalry and lack of consumer choices.

With the existence of a large monopoly, the risk of a potential entrant going out of businesses always looms. Hence, these potential entrants hesitate when it comes to taking a risk that could cost them too much. The word mono means single or one and the prefix polein finds its roots in Greek, meaning “to sell”.

A startup enthusiast who enjoys reading about successful entrepreneurs and writing about topics that involve the study of different markets. A great example of a company using this technique to develop a monopoly is Google. Monopolies that first enter a market have access to resources that it may choose to keep for itself.

Due to this, these scarce but essential resources are made unavailable to the potential entrants. Iarnród Éireann, the Irish Railway authority, is a current monopoly as Ireland does not have the size for more companies. There are three main types of abuses which are exploitative abuse, exclusionary abuse and single market abuse. Market definition may be difficult to measure but is important because if it is defined too narrowly, the undertaking may be more likely to be found dominant and if it is defined too broadly, the less likely that it will be found dominant.

Relevant geographic market

The decision of whether to shut down or operate is not affected by exit barriers.citation needed A company will shut down if the price falls below minimum average variable costs. A natural monopoly depends on unique raw materials or sophisticated technology to manufacture its products. In this, the monopolist firm utilizes its copyright and patents to prevent competition. In addition, such firms usually provide public utilities (like electricity, gas, etc.), adhere to government regulations, and incur high costs on research and innovation.

Such a barrier is generally measurable by the extent to which established sellers can persistently elevate their selling prices above minimal average costs without attracting new sellers. The barriers may exist because costs for established sellers are lower than they would be for new entrants, or because the established sellers can command higher prices from buyers who prefer their products to those of potential entrants. The economics of the industry also may be such that new entrants would have to be able to command a substantial share of the market before they could operate profitably. A monopoly has a negatively sloped demand curve, not a perfectly inelastic curve.