Monopoly (0)

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Monopoly
Market Power
In pure competition sellers are “ price takers.”
In most markets , at least one or more of the conditions required for pure competition are violated. This gives sellers or buyers the ability to influence the market price and allocation of resources
Pure competition results in an optimal allocation or resources given the objective of an economic system to allocate resources to their highest valued uses or to allocate relative scarce resource to maximize the satisfaction of (unlimited) wants in a cultural context .
Pure competition is the ideal that is be benchmark to evaluate the performance markets.
The economic theory of
  • monopolistic competitive markets,
  • oligopoly and
  • monopoly
is used to suggest the nature of problems that may exist when firms or agents have market power and are able to distort prices away from the purely competitive optimum .
The existence of market power is tied to the demand conditions the firm faces. If their product is (or can be differentiated), consumers may have a preference for one firm’s output relative to others.
A negatively sloped demand function (less than perfectly elastic) allows the firm to raise its price and not have its sales fall to zero .
In pure competition, the firms may all try to influence market demand but individual producers do not advertise their own product.
  • Many agricultural markets are close to pure competition.
  • In many cases some producers try to differentiate their products .
In pure competition, the firms’ outputs are homogeneous.
  • If the firm has is no opportunity to differentiate their product they have no incentive to advertise and to try to influence the demand for their product.
  • If a product can be differentiated by altering the characteristics of the good or simply by convincing the consumers that the product is different , the firm achieves market power.
Market power is the ability to have some control over the price of the good offered for sale
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Autor meeryke Õppematerjali autor

Mõisted

Sisukord

  • Monopoly
  • Market Power
  • Market Power among Sellers
  • Other Forms of Market Power
  • Barriers to Entry (BTE)
  • Economic Barriers
  • Economies of scale
  • Legal and Deliberate Barriers
  • Government-granted Monopoly
  • Barriers to Exit
  • Natural Monopoly
  • Demand and Marginal Revenue

Teemad

  • price maker
  • deliberate
  • Capital requirements
  • Technological Superiority
  • No Substitute Goods
  • Control of Natural Resources
  • Legal Barriers
  • Deliberate Actions
  • eliminate
  • government regulations
  • public ownership

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