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Unformatted text preview: Monopoly : an industry that produces a good of service for which no good substitutes exist and in which there is one supplier that is protected from entry by a barrier preventing the entry of new firms. (has market power )-In order to exist a monopolist needs barriers to entry to keep other firms from crashing the industry Characteristics of a Monopoly: 1.) No close substitutes 2.) Barriers to entry Market Power: the ability to set a price above marginal cost by influencing the total quantity offered for sale Types of barriers to entry: Legal barriers to entry - a legislated barrier- public franchise- and exclusive right granted to a firm to supply a good or service (ex. certain sausage vendors are given the exclusive right to sell their sausages in stadiums, the US Postal Service is given the exclusive right to carry first class mail)- government license- controls entry into certain industries or professions (ex. if you want to mine copper or bottle water you needs to be given a license)(ex....
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