Even a small firm may have a monopoly.įor example, a local water company or a local electricity company, supplying water and electricity in the city possesses all the characteristics of a monopoly. it slopes downward from left to right.įor the monopoly to exist, it is not necessary that the size of a firm should be large. The demand curve facing a monopolist is less than perfectly elastic, i.e. The monopolist being the only seller of the commodity in the market can increase the total sale by lowering the price and if, he raises the price, he would not lose all his sale. (vi) The demand curve facing the monopolist is negatively sloped. The other sellers too cannot affect the price and output of the monopolist. (v) The single seller affects no other seller by its own action in the market. Or we can say monopoly is a single firm identity.
Firm and industry thus have single identity. (iv) The firm being the sole supplier of a product constitutes industry. (iii) The entry of new firms into the industry is effectively barred by legal or natural barriers. (ii) The goods produced by a sole seller has not close substitutes. (i) There is only a single seller of a product or service in the market. Monopoly, indicates the following characteristics or features and example: The firm constitutes the entire industry”. “ Monopoly refers to a market where there is a single seller for a product and there is no close substitute of the commodity that is offered by the sole supplier to the buyers. Monopoly and perfect competition are at the two extremes. Monopoly is a market structure in which one firm makes up the entire market. It is the opposite of perfect competition. Monopoly is from the Greek word meaning one seller.
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