monopoly
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Presented by
Asim AnsariMudassar KasimiHarshal KirtaneAbdul GafurAsif SyedFazal Shaikh
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What is market?
Types of Market structure1.perfect competetion2.monopoly3.Monopolistic competition4.oligopoly
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Perfect competition
Many buyers many sellers ,too small to effect the price of a product.
The product is homogeneous.There is perfect mobility of
resources.
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oligopoly
Few sellers of a homogeneous or a differentiated product.
Entry possible but not easy.
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Monopolistic competitionThere are many sellers of
differentiated product.Entry and exit is easy in the long
run.
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Monopoly
Monopoly is a market situation in which there is only one producer of the commodity with no close substitutes.
A monopolist is a price maker.Either the ouput or price can be
fixed but not both.
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1. One Seller and Large Number of Buyers
2. Restrictions on the Entry of the New Firms
3. No Close Substitutes4. Full Control Over Price5. Possibility of Price
Discrimination
FEATURES OF MONOPOLY
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Dm
Q Q1
P
P1
O X
Y
Quantity
Price
Dm = Demand Curve for a Monopoly firm
DEMAND CURVE FOR A MONOPOLY FIRM
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Size of the market
Individualities of inputs
Controlling of crucial raw materials
Control over intellectual property
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It is the practice of charging different prices for the same product
Forms of price discrimination: <1>Personal <2>use of trade
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A price maker not a price takerAbsence of Competitive
AdvertisementAbsence of close substituteComplete control of market
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Higher pricesLack of choiceLoss of Product Quality
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To avoid price discriminationTo avoid compromise with the product QualityTo bring competition so that people get more choices to buy productTo give equal chance to every organization
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Government interventionOther Fears to monopolists Fear of potential rivals Fear of Government regulators Fear of normalization Fear of Public reaction Fear of Boycott Fear of Substitutes Differences in Elasticities of Demand
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1) Remove restrictive trade practices & fix high prices
2) Remove unfair Competition3) Restrict the control of very large share of
market4) Prevent unfair price discrimination5) Restrict mergers to avoid market
domination
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O M
B
A
Q
K
P
F
E
MC
OUTPUT
PR
ICE
& C
OS
T
AC
D/AR
Government imposes price ceiling through regulating Authority,and fixes Price belowthe monopoly price
W
S
By levying Lump-sum Tax the Government Can reduce or even monopoly profits
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