Monopoly

1
Monopoly
2
Characteristics

• One seller
• No close substitutes
• Price Searcher
• Overview

3
Profits Barriers to Entry

• Natural
• Artificial
• Governmental

4
Monopoly Power Price Discrimination

• In Theory
• In Practice
• Gainers Losers
• Dumping
• Old people - students

5
How Monopoly Compared to Perfect Competition

• Higher Prices
• Less output

6
Is Monopoly Bad?

• Monopoly Losses
• Monopoly in the Long-Run
• Real World monopoly

7
The Costs of Monopoly

• Deadweight Loss
• Monopoly Rent Seeking
• Managerial Inefficiency

8
Facts Fallacies About Monopoly
9
Facts Fallacies About Monopoly

• Monopolies charge the highest possible price
• Monopolies always earn (high) profits
• Monopolists dont have to worry about demand
• Monopolies charge a price higher than marginal
  cost
• Monopolists produce where demand is elastic
• Monopolies do not have supply curves
• The monopolist ultimately faces competition