The Economic Theory Of Monopoly And Monopoly - 1097 Words

The European Court has defined a dominant market position as: ‘...a position of economic strength enjoyed by an undertaking which enables it to [†¦] behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers’ Does this definition make economic sense? How should it be interpreted in the light of the economic theory of monopoly and oligopoly? Market Dominance†¦.(Intro) Monopoly and Oligopoly are market structures in economics which are deemed to exercise market power within their characteristics in terms of market concentration and price determination. More specifically, a Monopoly market structure is one where a single firm is the seller of a product in a market which therefore meaning it has the full market shares in a particular market. Monopolies are also characterised by a lack of competitors in a market, or viable substitutes to a good or service. Therefore, a firm in a monopoly enjoys the power of being a price maker in a market as it has no close competitors to influence price. Conversely, an Oligopoly market structure is on where a few firms in a market dominate as sellers of a good or service. The notion of having a small number of sellers makes the idea of rigorous completion less likely rather in oligopolies firms look to interact(collusion)amongst each other to gain profits. This is vitally important as the actions of one firm can have a very considerable impact on the actions of others as well as profits.Show MoreRelatedA Monopoly Is A Single Seller951 Words   |  4 PagesA monopoly (from Greek monos ÃŽ ¼ÃÅ'ÃŽ ½ÃŽ ¿Ãâ€š (alone or single) + polein πωÎ »ÃŽ µÃ¡ ¿â€"ÃŽ ½ (to sell)) exists when a specific person or enterprise is the only supplier of a particular commodity (this contrasts with a monopsony which relates to a single entity s control of a market to purchase a good or service, and with oligopoly which consists of a few entities dominating an industry).[2] Monopolies are thus characterized by a lack of economic competition to produc e the good or service, a lack of viable substitute goodsRead MoreEssay about Economics of a Monopoly1506 Words   |  7 PagesEconomics of a Monopoly Introduction  ¡Ã‚ §Monopoly ¡Ã‚ ¨ is defined by its market power. Monopolies are always known to possess an exclusive control over its particular market and that gives them the sovereign authority to control the prices for its goods or services (Dictionary.com Unabridged (v1.1), 2006). Hence, they represent the market. They indeed have detrimental effects on consumer and social welfare. In this paper, section 1 will focus on the theory and economics of a monopoly. Section 2Read MoreEssay on Natural Monopoly1091 Words   |  5 Pages| Natural Monopoly | Telecommunications Law and Regulation Week 2 | | | | | I believe that times change and as they, change rules and regulations must adapt to the times. Therefore, the treatment of the different industries must represent the different industries as they grow. I do not think the Telephone and Broadcast should never have or ever be considered a â€Å"Natural Monopoly†. The concept of natural monopoly presents a challenging public policy dilemma. On the oneRead MoreCompetition Policy : Theory And Practice1477 Words   |  6 Pages Market Power 1. Introduction With the development of economics, market power is a heated topic. Motta (2005) states that market power refers to the ability of firms to set prices above marginal costs in the book called Competition Policy: Theory and Practice. George A. Hay thinks â€Å"The modern concept of the market power focuses on the potential for consumers to suffer injury through the actions of a single firm or a group of firms acting in concert†(1991) in his essay about market power in antitrustRead MoreTypes of Competition1000 Words   |  4 PagesEconomic theory usually differentiates across the four major types of market structure: monopoly, oligopoly, monopolistic competition, and perfect competition. Although the list of market structures can be virtually unlimited, these four types are considered to be the basis for understanding the principles of market performance in different market conditions. Each of the four types of market structures possesses its benefits and drawbacks. In any of t hese markets, an entrepreneur can develop a strategyRead MoreThe Market Structures Of A Market Structure962 Words   |  4 PagesIn economics, there are four market structures that function in the worldwide market. Each of these market structures correlates with one another to create the demand and supply of the market. However, these market structures have some unique traits that no other theory can have alike. Therefore, a comparison and contrast is necessary to distinguish each of these theories from one another. These market structures of the economy are perfect competition, monopoly, monopolistic competition, and oligopolyRead MoreEssay on Microeconomics and the Board Game Monopoly1024 Words   |  5 PagesAll I ever needed to know about microeconomics I learned from the Hasbro board game Monopoly. Some people, like myself, need practical models in order to understand certain concepts and theories. In our text book The Economy Today it completely ignores the intrinsic value of business decisions because you can’t put a numeric value on it. The game Monopolyâ„ ¢ is all about the numbers. In the game of Monopolyâ„ ¢ you have goals: The object is to bankrupt all opponents. To do so, you must be dedicatedRead MoreGovernment Regulation1301 Words   |  6 Pagespromote competition in the market space. The reason industrial regulation exists is to keep an eye on firms by making sure monopolies don’t start, however if they do or currently exist regulations are put in place to monitor prices and products to make sure society and consumers are not taken advantage of. Regulation has been put into place to inhibit growth of monopoly by making restraint of trade illegal and by imposing the possible threat of felony charges with the intent to conspire. IndustrialRead MoreEconomics1291 Words   |  6 PagesLeibenstein argued that the loss of economic efficiency in industries that are not perfectly competitive has been understated. He argued that when competition is weak, firms are under less pressure to adopt the best techniques or to hold down their costs. He referred to this effect as x-inefficiency. If x-inefficiency causes a firms marginal costs to rise, show that the deadweight loss in Figure 10.10 understates the true deadweight loss caused by a monopoly. If the monopoly were more efficient, its marginalRead MoreMain Factors of Product Pricing in the Uk1416 Words   |  6 Pagesobject represents the overall demand for that product at a specific time. However, every firm had a different ideology about price and they way they set price. One of these main factors that affect price is the actual objective of the firm. Traditional theory suggests that firms will charge a profit-maximizing price where price is determined when marginal cost equals marginal revenue. They operate to seek a maximum return on the investment and costs they have input. The diagram below shows how firms produce