Characteristics Of Monopoly Market Structure

Monopoly Market Structure

“The word monopoly is derived from the Greek words mono for "one" and polein for "seller." (Amacher & Pate, 2013, ch. 10). Hence, the monopoly market structure having one dominant firm, called a price searcher. A prime example of a monopoly firm is a utility company. Consumers may have one utility company that provides electricity in their community, and since there are no other competitors, they have no other choice but to source power from this company. Characteristics of the monopoly market structure include the following.

• One dominant firm

• No competition

• A unique product with no close substitutes

• Very high barriers to entry

• Considerable control over price

If new firms can enter this market freely,

The four market structures: perfect competition, monopolistic competition, oligopoly, and monopoly entails various characteristics that exemplify the level of competition within the market. These distinct features include having a number of sellers, producing a homogeneous or differentiated goods or services, pricing power, a level of competition, barriers to entering or exit the markets, efficiency, and profits. Due to the high profit and revenue some firms face within the various market structure, barriers to entry are put in place to restrict new competitors from entering. Natural, artificial, and governmental barriers play a vital role in firms ability to stay in a market, be productive, efficient, and competitive. Firms reaction to price changes, the government’s ability to create a price, and the influence of international trade on the market structures, are essential factors that economist evaluate the various market structures. Overall, the competition between market structures may not always result in the same outcome, due to the behavior and interaction between consumer’s and buyers, but in the end, both the buyer’s and seller’s are needs are