Monopoly Market Structure Essay Example | Topics and Well Written Essays - 1000 words

Monopoly Market Structure - Essay representativeIn the operating system of monopoly there is usually one firm that provides the majority of the products and services change and there may be a handful of smaller firms that might have little or no impact on the large dominant firmBecause of the lack of competition the firms in the monopoly makes tiptop normal economic profit which attracts other firms to enter the market. However there are quite some barriers for the juvenile entrants (Mike Moffatt).The technology may be such as to exhibit substantial economies of scale which claim only a single plant if the economies are to be fully reaped. For example in transport, electricity, and communication theory there are substantial economies which can be realized only at large scales of output. The coat of the market may not allow the existence of more than a single large plant. In those conditions it is said that the market creates a natural monopoly and it is usually the government in such cases undertakes the production and dispersal of the commodity or service so as to avoid the growing of the consumers.There is an ongoing statement about the advantages and disadvantages of monopoly. The consensus seems to be that the economic case for and against monopoly needs to be judged on a case by case basis- particularly when assessing the impact on economic welfare (Tutor2u).(1) Economies of Scale and Low... Advantages and Disadvantages of MonopolyThere is an ongoing upset about the advantages and disadvantages of monopoly. The consensus seems to be that the economic case for and against monopoly needs to be judged on a case by case basis- particularly when assessing the impact on economic welfare (Tutor2u).There are certain clean-cut benefits accruing out of monopoly. These are(1) Economies of Scale and Lower Prices - Because the monopoly producers often provide the goods or services on a large scale the producer may be able to take advantage of the economies of scale jumper cable to a reduction in the total cost of production. Although this may increase the lolly of the monopolist sometimes the higher efficiency in production may be passed on to the consumer in the form of dishonor scathes for the product or service.(2) Regulation of Monopoly - Since there is always the possibility of economic welfare loss arising from the exploitation of monopoly power there are governmental regulations which can control the annual price increases and can to a fault introduce fresh competition in certain industries which is beneficial to the consumers.(3) Research and Development, and Innovation - There is the extremity for the large firms to remain competitive globally to earn supernormal profits. Some part of the supernormal profits might be used to make research and development programmes which have the potential to bring new and innovative products and services into the market for the benefit of the consumers. (4) Price Discrimination - Some fo rm or price discrimination being adopted by the monopolists may benefit the consumers.(5) Domestic