The paper "Monopoly Market" is a great example of a report on macro and microeconomics. This is a market structure in which there is only one seller or producer for a particular product. What this means is that the single seller or the single producer constitutes the industry that produces that particular good or service that is sold in that market. A monopoly market emerges due to the existence of substantial barriers that restrict entry into the market. This feature gives the seller or producer the power to control both output and the price.
The monopoly has the capacity to determine what level of output to produce as well as the price to charge for each unit of that output. Economic, social, or political factors are part of the sources of barriers that restrict entry into the monopoly market. The effect of these barriers is to give the monopoly the powers outlined above. This makes the consumer's price takers for the product or service provided by the monopoly. Therefore, the monopoly can charge high prices for a low quantity of output. When this happens, the monopoly is said to portray welfare loss.
This results from the comparison between the monopoly and the perfect competition market structure, where the price for a given quantity of output is lower than that of the monopoly, given that the output level of the perfect competition is higher than that of the monopoly (Smith & David 345). This is shown in the diagram below: The monopoly charges price Pm for the quantity Qm, while in the perfect competition price Pc is charged for the output Qc. This shows how the monopoly is able to control the prices of its output. Causes of a monopoly market Legal monopoly Legal processes lead to the emergence of monopolies due to the substantial barriers that those processes create.
Legal concerns that cause the occurrence of monopolies include patent rights, copyrights, and licenses. These processes are backed up by law that has been formulated and implemented to oversee and govern market structures.
Smith, George David. From Monopoly to Competition: The Transformations of Alcoa, 1888- 1986, New York: Cambridge University Press, 2003.
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Eisenach, Jeffrey August, Lenard,Thomas M. Progress and Freedom Foundation (U.S.). Competition, innovation, and the Microsoft monopoly: antitrust in the digital marketplace : proceedings of a conference held by the Progress & Freedom Foundation in Washington, DC, February 5, 1998, Chicago: Springer, 1999.
N. Gregory Mankiw. Principles of Microeconomics Edition 5, New York: Cengage Learning, 2008.
Richard Schmalensee, Mark Armstrong, Porter Robert. Handbook of industrial organization, Volume 3, Handbooks in economics, Handbook of Industrial Organization, Robert D. Willing, 2007.