Meeting _6 - Monopoly and Monopolistic Competition

Meeting _6 - Monopoly and Monopolistic Competition - Pure...

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Pure Monopoly A pure monopoly is a market with a sole producer of a specific good or service for which there are no close substitutes and, no competitors. By definition, the pure monopolist is the entire industry. Therefore, this firm faces the entire market demand curve. Market power
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Characteristics of Monopolies One firm in the industry Price Searcher Barriers to Entry Market Power
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Barriers to Entry For any amount of monopoly power to continue to exist in the long run, the market must be closed to entry in some way. Three of the barriers to entry that have allowed firms to reap monopoly profits in the long run are: Ownership of Resources Government Regulations Economies of Scale
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Types of Monopolies 1. Natural Monopoly: usually arises when there are large economies of scale relative to the market demand, such that one firm can produce at a lower average cost than can be achieved by multiple firms. (Utilities)
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Economies of Scale Cost Quantity A B C
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Types of Monopolies 1. Technological Monopoly: Someone who invents something that allows for the creation of a unique product often has a technological monopoly. Normally, the government provides a patent that gives the creator exclusive right to manufacture, rent, or sell that invention for up to 20 years.
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Types of Monopolies 1. Government Monopoly: Governments— federal, state, and local—often create their
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This note was uploaded on 04/07/2008 for the course EBGN 201 taught by Professor Miller during the Fall '07 term at Mines.

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Meeting _6 - Monopoly and Monopolistic Competition - Pure...

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