Pure monopoly - a position on the market of goods and services, characterized by the presence of only one seller of this type of product or service [1] .
Characteristic features of this situation are: uniqueness of the product, ownership of the main types of raw materials, low average costs, patent rights, special privileges ( licenses ) [2] . Pure monopolies usually arise where there are no alternatives to a given product or service, and there are no close substitutes [3] .
A pure monopoly is characterized by a high price level, the further growth of which is restrained only by the risk of a decrease in demand.
The effectiveness of pure monopoly
The existence of monopolies is inevitable, but the attitude towards them is ambiguous. The main argument of the opponents of the monopolies is that, taking advantage of their position in the market, they occupy the volume of production, raising prices, making big economic profits. In addition, there is the likelihood of higher production costs and less efficient use of resources due to lack of competition. Monopolies try to influence state bodies, worsening the situation on the market, and, seeking legislative consolidation of their position.
Supporters of the existence of monopolies question the enemyβs arguments and put forward the following positive features of the monopoly:
1) Monopoly deals with economies of scale;
2) Monopoly is engaged in research and development ( R&D );
Thanks to large firms, about 80% of inventions appear. Monopolies are constantly engaged in innovation, thereby they extend their status as an open monopoly.
See also
| One | Some | A bunch of | |
| Sellers | Monopoly | Oligopoly | |
| Buyers | Monopsony | Oligopsony | |
| Sellers and buyers | Oligonomy | Polypoly |
Notes
- β Encyclopedic Dictionary of Economics and Law
- β Referats- Pure Monopoly (inaccessible link) . Date of treatment January 19, 2010. Archived March 9, 2010.
- β Microeconomics: Pure Monopoly