Lecture Economics (19/e) - Chapter 10: Pure monopoly

10 Pure Monopoly McGraw­Hill/Irwin Copyright © 2012 by The McGraw­Hill Companies, Inc. All rights reserved. Four Market Models Characteristics of the Four Basic Market Models Characteristic Number of firms Type of product Control over price Conditions of entry Nonprice competition Examples Pure Competition A very large number Standardized None Very easy, no obstacles None Agriculture Monopolistic Competition Many Differentiated Some, but within rather narrow limits Relatively easy Considerable emphasis on advertising, brand names, trademarks Retail trade, dresses, shoes Oligopoly Few Standardized or differentiated Limited by mutual inter-dependence; considerable with collusion Significant obstacles Typically a great deal, particularly with product differentiation Steel, auto, farm implements Monopoly One Unique; no close subs. Considerable Blocked Mostly public relation advertising Local utilities LO1 10-2 An Introduction to Pure Monopoly • Single seller – a sole producer • No close substitutes – unique product • Price maker – control over price • Blocked entry – strong barriers to entry block potential competition • Non-price competition – mostly PR or advertising the product Public utility companies •Natural Gas Electric •Water Near monopolies Intel •Wham-O Professional sports teams LO1 10-3 Barriers to Entry • Barrier to entry: a factor that keeps firms from entering an industry •Economies of scale •Legal barriers: patents and licenses •Ownership of essential resources •Pricing LO1 10-4 Monopoly Demand • The pure monopolist is the industry • Demand curve is the market demand curve •Downsloping demand curve • Marginal revenue is less than price LO1 10-5 ... - tailieumienphi.vn