Consumers are exploited as
super normal profits are earned
Barriers to entry
High start up costs
Government regulation
Annotations:
Although governments normally try to prevent the growth of monopolies, in certain cases they create or preserve them. An example is the Irish mail company, "An Post". The Irish government prevents the entry of other firms into the mail industry in order to ensure uniform prices throughout the country, whether one lives in an isolated rural area or an urban centre.
Brand loyalty
The long run and short run equilibriums of a
monopoly are identical
Barriers to entry prevent new firms
entering market in pursuit of super
normal profits
The monopolist continues to make
supernormal profit and the consumers
have no alternatives
Wide agreement among economists that
monopolies are bad for the economy and
should be prevented
Governments often introduce
regulations to control the growth
of monopolies
Monopolies are
inefficient, with
average cost not at
the minimum level,
and so waste
resources
Like all market types, we make
assumptions about the existence of
monopolies
There is only
one firm in the
industry
The firm aims to
make maximum
profit
Annotations:
i.e, the firm produces the quantity where marginal cost equals marginal revenue
The monopolist can
control either the
price charged or the
quantity sold, but not
both