MONOPOLY

PRESENTED BY:

ZARMINA SHER

What is Monopoly?

• The only seller of a product that hasn't been duplicated.

Example

1. Shimano,

2. YKK ( Waikeikei),

3. Nidec,

4. Mabuchi,

5. Debeers diamonds

6. Intel

Characteristics

• Single seller,• Unique product,• Barriers to entry• Price maker• Non-price competition

Barriers to Entry

•Economies of scale,•Legal barriers: Patents, Copyright, License, Franchise,

•Network Externalities:

Types

• Natural monopoly,• Geographic monopoly,• Technological monopoly,• Government monopoly,

Causes of monopoly

What are the causes of monopoly?

Why Monopolies can be beneficial?

Research and Development.

Economies of scale.

International Competitiveness.

Monopolies Successful Firms.

Advantages Of Monopoly

Types of profit in monopoly.

• Normal profit• Supernormal profit• Sub normal profit

Normal profit

AR = AC monopolist will get normal profit

Supernormal profit

AR>AC monopolist will get supernormal profit

Sub-normal profit

AC > AR monopolist will get Sub- normal profit

Price and output under pure monopoly

The monopolists demand curve constraints on monopoly

Price and output under pure monopolyA change in demand will cause a change in

price, output and profit.

Price discrimination

Different customers charged different charges

Conditions on price discrimination

Monopoly power

Elasticity of demands

Separation of the market

Examples of price discrimination

• Cinemas and theaters,• Student discounts,• Car rental firms,• Hotels ,

Aim of price discrimination

To increase the total revenue.

Extract consumer surplus and turn it into producer surplus

Thanks you