Monopoly

Characteristics of monopoly

1. Single firm (producer, seller)

2. No variety of goods

3. Complete barriers to entry

4. Complete control over price

Economies of scale

Government monopolies

Patent- license that gives inventor exclusive right to sell product for 20 years

Government monopolies

• Franchise- right to sell a good or service in an exclusive market

Government monopolies

License- government issued right to operate a business

Government monopolies

Industrial organizations- an industry government allows to operate with restricted number of firms that act together

Price discrimination

Dividing customers into groups based on how much they will pay for a good

Can be done if firm has market power (ability to change prices and output like a monopolist)

Targeted Discounts

Manufacturer’s rebates

Senior citizen or student discounts

Promotions