MONOPOLY

The Word Monopoly is a Latin Term. Mono means

Single and Poly means Seller.

Monopoly is a form of Market Organization in which

there is only One Seller of the Commodity.

There are No Close Substitutes for the Commodity

sold by the Seller.
 Features Of Monopoly
1. Single Person or a Firm.

2. No Close Substitutes.

3. Large Number of Buyers.

4. Price Maker.

5. Downward Sloping Demand Curve.

Types Of Monopoly Practices
1. Perfect Monopoly
2. Imperfect Monopoly
3. Private Monopoly
4. Public Monopoly
5. Simple Monopoly
6. Discriminating Monopoly
7. Legal Monopoly
8. Natural Monopoly
9. Technological Monopoly
10. Joint Monopoly
 Perfect Monopoly
It is also called as absolute monopoly.

In this case, there is only a single seller of product

having no close substitute; not even remote one.

There is absolutely zero level of competition.

Such monopoly is practically very rare.

Bill Gates played Perfect Monopoly in US for MS

Word.
 Imperfect Monopoly
It is also called as relative monopoly.

It refers to a single seller market having no close

substitute.

It means in this market, a product may have a

remote substitute. So, there is fear of competition
to some extent.

e.g. Vodafone is having competition from fixed

landline phone service industry BSNL.
 Private Monopoly
When production is owned, controlled and
managed by the individual, or private body or
private organization, it is called private monopoly.

e.g. Tata, Reliance, Bajaj groups in India.

Such type of monopoly is profit oriented.

 Public Monopoly
A Government monopoly (or Public monopoly) is
a form of coercive monopoly in which a
government agency or government corporation is
the sole provider of a particular good or service
and competition is prohibited by law.

It is a Monopoly created by the Government.

the German Public Train System is entirely

government run; there are no private competitors.
That is a true Public monopoly.
 Simple Monopoly
It is also called Single-Price Monopoly.

The simple monopolist abides by the law of one

price. Everyone pays the same market price for all
units purchased.

Simple monopoly firm charges a uniform price or

single price to all the customers.

He operates in a single market.

 Discriminating Monopoly
Such a monopoly firm charges different price to
different customers for the same product. It
prevails in more than one market.

An example is an airline monopoly.

Airlines frequently sell various seats at various

prices based on demand.
 Legal Monopoly
It is a monopoly that is protected by law from
competition.

A government-regulated firm that is legally

entitled to be the only company offering a
particular service in a particular area.

For example, AT&T operated as a legal monopoly

until 1982 because it was supposed to have cheap
and reliable service for everyone.
 Natural Monopoly
A type of monopoly that exists as a result of the
high fixed or start-up costs of operating a business
in a particular industry.

Government often regulate certain natural

monopolies to ensure that consumers get a fair
deal.

The utilities industry is a good example of a

natural monopolyGas , Water, Power.
 Technological Monopoly
It emerges as a result of economies of large scale
production, use of capital goods, new production
methods, etc.

E.g. engineering goods industry, automobile

industry, software industry, etc.

Internet Explorer was the only browser available to

browse the web between 1995-2000.
 Joint Monopoly
If two or more business firms acquire monopoly
position through amalgamation, cartels,
syndicates, etc, then it becomes joint monopoly.

e.g. Actually, pizza making firm and burger

making firm are competitors of each other in fast
food industry. But when they combine their
business, that leads to reduction in competition.
So they can enjoy monopoly power in market.
 Quick Summary

Perfect Discriminating
Imperfect Legal
Private Natural
Public Technological
Simple Joint