Characteristics of monopoly
1. Single seller: Monopoly refers to a market structure where there is only one seller who controls the supply of a specific product or service.
2. Unique product: The monopoly seller offers a unique product or service that has no close substitutes, giving them a significant control over the market and pricing.
3. Barriers to entry: Monopolies often have high barriers to entry, such as government regulations, patents, or high start-up costs, which make it difficult for new competitors to enter the market.
4. Market power: The monopolist has significant market power, allowing them to set prices and control the quantity of goods or services produced without fear of competition.
5. Price maker: In a monopoly, the seller acts as a price maker, determining the price of the product based on what consumers are willing to pay rather than competitive market forces.
6. Lack of competition: Monopolies do not face competition from other firms, which can lead to higher prices, lower quality products, and reduced consumer choice.
7. Economies of scale: Monopolies can take advantage of economies of scale to lower their production costs and increase their profits, as they can produce at a lower average cost than smaller firms.
8. Consumer exploitation: Without competition to keep prices in check, monopolies can potentially exploit consumers by charging higher prices for their products or services.
9. Potential for inefficiency: Monopolies can potentially be less efficient than competitive markets, as there is less pressure to innovate, improve quality, or keep costs down.
10. Government regulation: In some cases, monopolies may be subject to government regulations to prevent abuse of their market power and protect consumer interests.