Date post: | 18-Jan-2016 |
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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