16th April 2012
Today, many firms are enjoying a monopoly of their products/services in the market. Monopoly may be defined as the complete control over a commodity enjoyed by a particular company in the market. There will be only a solo manufacturer or provider of the commodity and customers have to depend on them whenever there is a demand since there are no substitutes available. As a result, such a manufacturer can have an absolute control over the price as well as quantity available in the market. Another benefit enjoyed by the monopolies are that they do not face any risk of an opponent entering the market. In order to establish complete monopoly, usually companies take care of the following things: 1. They acquire the complete control over the key raw materials required for manufacturing the product. 2. They may acquire a patent in order to be the solo manufacturers or providers of the product or service. 3. They acquire the technical and productive efficiency to meet the market demand for their commodity. Usually a commodity produced by the monopolies will be manufactured in fewer quantities only and their cost may be higher. Since there is no market competition, the advantages are mostly enjoyed by the manufacturers. Little are the benefits obtained by the consumers, since they have no choice when a demand arises.
FEATURES OF MONOPOLY
The following are the main features of a monopoly market:
1. In a monopoly, there is a solo manufacturer or provider of a commodity. So all the demands in the market are to be met by this single vendor. 2. Highest benefits are enjoyed by the solo manufacturer. 3. The price, quantity as well as the quality of the commodity is the absolute decision of the manufacturer. Normally, commodities available in a monopoly market will have a higher price. 4. There is no competition or substitutes in a monopoly...