Conditions for Monopoly

Conditions for Monopoly - Conditions for Monopoly...

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Conditions for Monopoly In a perfectly competitive market, there are many firms, none of which is large in size. In contrast, in  monopolistic  market there is only  one  firm, which is large in size. This one firm provides all of the  market's supply. Hence, in a monopolistic market, there is  no difference  between the firm's supply  and market supply.  Three conditions characterize a monopolistic market structure. First, there is  only one firm  operating  in the market. Second, there are  high barriers to entry.  These barriers are so high that they prevent  any other firm from entering the market. Third, there are  no close substitutes  for the good the  monopoly firm produces. Because there are no close substitutes, the monopoly does not face any  competition.  Barriers to entry. A barrier to entry  is anything that prevents firms from entering a market. Many 
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