1a. A monopoly refers to a market structure that consists of only one seller or a single firm for a good. The entire single business is the representative of the industry (Investopedia, 2003.). Hence, it is an Imperfect Competition market as there is only one single seller and many buyers in the entire industry as compared to a Perfect Competition where there are many sellers and buyers. There are several characteristics, otherwise known as assumptions, in which a monopoly is demonstrated. Firstly, in the market of a monopoly, there is only a single firm, producer or seller in the market for a good and a large number of consumers or buyers. This single seller is the sole dominant firm that produces and supplies the good in the whole industry. As mentioned above, this is because the firm is the sole dominant in the industry and is the representation of the entire industry. Therefore, the demand curve for the good or product supplied by the firm is equivalent to the demand curve for the market (Patel, 2016). A monopoly can also be created and established by the Government to impose rules and regulations on the industry that it wants to have control over (Investopedia, 2003). For example, the Public Utilities Board (PUB) in Singapore is an example of a form of monopoly as it is has regulatory and supervisory power, as well as responsibility, over the entire water supply system in Singapore. It is a public monopoly due to its purpose and objective to serve and cater to the public’s needs of water supply (Lai & Lim & Koh & Chan & Lim, 2006). Secondly, as there is an only single dominant firm in the industry, the good or product supplied is highly inelastic and there is a extreme lack of a close substitute good which can be of alternative to buyers or consumers. This product differentiation makes the good unique to the firm as there is no other perfect substitute available. As such, the firm has the power to decide and dictate the attributes, like the features, quality and price of the good it produces or supplies. Being the only seller of the good and many buyers, this allows the firm to be a price maker and set the price of the good. This unique good sold by the firm means that consumers are only able to purchase this good from one particular firm. For example, in the 1980s and 1990s before the Government deregulation, consumers in the United Kingdom could only purchase gas from British Gas, telephone communication services from British Telecommunications and postal services from Post Office (Study Moose, 2016). Lastly, there are high barriers of entry and exit into the monopoly market, which makes it difficult for new firms to enter the market. There are three kinds of entry barriers: legal barriers, structural barriers and strategic barriers. The legal barriers include rules and regulations from the Government intervention and for example, certification, business licensing, patents, registration, sole ownership of resources and taxes. Structural barriers refer to technical structures and characteristics of the industry, for example, the differentiation of the product, and the economics of scale. Strategic
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