Production in the Monopoly market should be in optimum scale as supply rise may bring fall in the price of the product. Monopoly market is solely captured by an individual seller or firm of a particular commodity having no competitors in the market, the whole output of such commodity depends upon that firm or trader thus they form industry with a Monopoly.Īs the Monopolist is the sole king of that industry, he also determines the cost of the commodity produced, and there is no one in the market as a competitor who can challenge his price and the value decided by him becomes the final price of that product to sell in the market.Īs the monopolist is a sole trader of that commodity in the whole market, he may be biased amidst customers, i.e., can charge more from rich and low from poor customers. The following are some of the characteristics of Monopoly: One of the best examples of this type of Monopoly is (OPEC) Organization of Petroleum Exporting Countries. This type of Monopoly comes into existence to avoid the throat-cutting competition in the market and creates a group of monopolists to escalate their profits. It discriminates amongst the buyers for selling similar products, different prices are charged on divergent buyers such as lawyer charges different fees from his every client. In this type of Monopoly, uniform charges are charged by the traders to all the buyers for its products. The government governs this Monopoly for printing currency and the minting of coins, etc. It is a Monopoly which arises because of legal barriers or provisions such as copyrights the law prohibits an action of replicating any design registered under a particular brand name.
When the government controls the production for public welfare, it is said to be a social monopoly. It depends upon the natural factors of the area such as Karnataka has a Monopoly of the coffee market as the climate of Karnataka suits best for coffee cultivation.
Therefore, the market controlled by a sole trader is said to a Monopoly market. The word Monopoly is a combination of two words in which “ mono” implies “ single” and “ poly” means “ seller”.
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