Simple monopoly terms

Closed Monopoly

Has the protection of legal restrictions. Are often state sponsored services (Public utilities, Transportation, Infrastructure)

Natural Monopoly

When long-run average cost is a minimum when just one firm server the market. They occur for services with high fixed costs (establishing and maintaining an electrical grid,

for instance). In such a industry, the minimum efficient scale of production for a good is close to quantity demanded at any price high enough to cover the cost. Dividing production between two or more firms would mean an inefficiently high cost per unit for each firm.

Open Monopoly

a market where one firm temporarily becomes the sole provider of a good or services but doesn’t have the special legal perfections that come with closed monopoles

Limit pricing

a pricing strategy, it limits short-run profits in order to limit market entry, its when a monopolist to set a lower price then the short-run profit maximizing the level to discourage potential competitors

Rent Seeking

investing in legal and lobbying efforts, raising its own cost., The pursuit of monopoly profits (“rents”) through political or legal influence rather than productive activity

Price Discrimination

Charging different prices to different buyers for the same product

Two part pricing