4.1.5.6 Monopoly and monopoly power

monopoly, 25

A ___________ is a market structure where a single firm dominates the market, typically defined as having more than __% of market share,

Pure monopoly

Supplies 100% to the market but this is rare and are usually found in state owned natural monopolies

single seller, high barriers to entry, price maker

Characteristics of a Monopoly:

legal restrictions, patents

Monopoly: High Barriers to entry

price maker

monopolist has significant control over the price due to the lack of competition

Monopoly/market power

refers to a company’s relative ability to manipulate the price of an item in the marketplace by manipulating the level of supply, demand, or both.

abnormal, long-run, entering, re-invest, dynamic

Due to barriers to entry monopolist can earn _______ profits in the ______, as outside firms are prevented from _________ the market.

Monopolists can ______ profits in innovation and more efficient production, allowing for _______ efficiency.

Apple, Pfizer and Tesla reinvest profit leading to dynamic efficiency

Dynamic Efficiency(AO2)

gov. regulation, management, industry type

Evaluation(AO4): Monopoly

price, service, excesses

Depends on gov. regulation(AO4):

If gov. threatens ____ regulation or regulation of _______, this can reduce the ______ of some monopolies

cost, Amazon, compete

Depends on management(AO4):

• Some large monopolies have successful management to avoid the rising ____ possible in large monopolies

• e.g. _______ has grown by keeping small units of workers who feel a responsibility to _______ against other units within the firm

merged, R&D

Depends on industry type(AO4):

If 2 pharmaceutical or aeroplane manufacturers ______, there could be a good case to say that they would use their combined profits for ___.