1. MONOPOLY
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2. Presented By
Shubhangi Sinha
Manisha Singh
Sonali Ahiwale
Neelam Shinde
Nehali Upasham
Rohinee Ghuge
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3. Introduction
MONO = means “One”
+
POLY = means “ Sell”
One Seller/ One Producer
• Monopoly is the polar
opposite of perfect
competition.
• Monopoly is a market
structure in which a single
firm makes up the entire
market.
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4. Definition Of Monopoly
• According to PROF. CHAMBERLAIN,” Monopoly refers to
the control over supply.”
PROF. CHAMBERLAIN
• According to PROF.ROBERT TRIFFIN ,”Monopoly is a market
situation in which the firm is independent of price changes in
the product of each and every other firm.”
PROF.ROBERT TRIFFIN 4

5. Monopoly
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6. Why Monopolies Arise?
• The fundamental cause of monopoly is the existence of
barriers to entry.
• Monopolies exist because of barriers to entry into a
market that prevent competition-
• Legal barriers
• Sociological barriers
• Natural barriers
• Barriers to entry have three sources-
• Ownership of a key resource.
• The government gives a firm the exclusive right to produce some good.
• Costs of production make one producer more efficient than a large number
of producers.
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7. Single seller
Characteristics
of monopoly
No close
substitutes
Barriers to
entry
Non- price
competition
Downward
sloping
demand
curve
Price maker
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8. Types of Monopolies
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Perfect Monopoly
Imperfect Monopoly
Private Monopoly
Public Monopoly
Simple Monopoly
Discriminating Monopoly
Legal Monopoly
Natural Monopoly
Technological Monopoly
Joint Monopoly

9. Demerits of monopoly
• Consumer options are limited.
• Profits do not signal firms to enter the industry. (They can’t get in
because of the barriers to entry.)
• There is allocate inefficiency. ( P > MC ) The monopolist does not
produce all units that consumers value more than it costs to make
them.
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10. Monopoly Market Demand Curve
Price
Because the monopoly firm is
the only seller of a good, the
market demand curve for the
good is the same as the
demand curve for the firm’s
product.
Quantity
Demand
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11. Perfect Competition vs. Monopoly
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12. Governments Role in Monopoly
• Prevent Excess Price
• Regulation of quality of service
• Merger Policy
• Breaking up a monopoly
• Investigation of Abuse of Monopoly Power
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13. Price Discrimination
• Price discrimination is the ability to charge different prices to
different individuals or groups of individuals.
• A price-discriminating monopolist can increase both output
and profit.
• It can charge customers with more inelastic demands a higher
price.
• It can charge customers with more elastic demands a lower
price.
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14. The Early Bird Gets a Lower Price
• Early Bird Specials—Restaurants
charge special, lower prices for
early diners.
• Matinees—Theaters charge less
for earlier shows.
• Air Fares—Airlines charge less
for flyers willing to fly “off
peak,” i.e. early morning and
late night.
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15. Case Study
• TATA NANO
• Monopoly in the lower economic segment
• TATA, the only seller
• No close substitutes for Nano in the market
• Barriers to entry in the market(capital requirement,
technology, etc.)
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16. Summary
• A monopoly is a firm that is the sole seller in its market.
• It faces a downward-sloping demand curve for its product.
• A monopoly’s marginal revenue is always below the price of
its good.
• Like a competitive firm, a monopoly maximizes profit by
producing the quantity at which marginal cost and marginal
revenue are equal.
• Unlike a competitive firm, its price exceeds its marginal
revenue, so its price exceeds marginal cost.
• A monopolist’s profit-maximizing level of output is below the
level that maximizes the sum of consumer and producer
surplus.
• Monopolists can raise their profits by charging different prices
to different buyers based on their willingness to pay. 16

17. Thank You
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