Monopoly By Jonathan Hamilton

Key Terms you should know Monopoly Monopoly Economies of scale Economies of scale Natural monopoly Natural monopoly Government monopoly Government monopoly Patent Patent Franchise Franchise License License Price discrimination Price discrimination Market power Market power

What is it? monopoly- The exclusive possession or control of the supply or trade in a commodity or service monopoly- The exclusive possession or control of the supply or trade in a commodity or service Described as any business that has high entry costs to prevent competition. Described as any business that has high entry costs to prevent competition.

How it happens A monopoly is formed in a few ways natural monopoly- a market that runs most efficiently when one large firm supplies all the output. government monopoly- is a monopoly created by the government.

ways it can happen Patent- gives a company exclusive rights to sell a new good or service for a period of time. Patent- gives a company exclusive rights to sell a new good or service for a period of time. Franchise- a contract issued by a local authority that gives a single firm the right to sell its goods within an exclusive market. Franchise- a contract issued by a local authority that gives a single firm the right to sell its goods within an exclusive market. License- grants firms the right to operate a business. License- grants firms the right to operate a business.

How it works Economies of scale- characteristics that cause a producers average cost to drop as production rises. Economies of scale- characteristics that cause a producers average cost to drop as production rises.

Why it can happen Patents guarantee that a company can profit from their research without competition. This encourages firms to research new products that benefit society as a whole even though research and development cost may be high the market power that comes with this patent allows firms to maximize their profit. Patents guarantee that a company can profit from their research without competition. This encourages firms to research new products that benefit society as a whole even though research and development cost may be high the market power that comes with this patent allows firms to maximize their profit.

Advantages to a monopoly Price discrimination- A pricing strategy that charges customers different prices for the same product or service charging each customer the maximum price that they are willing to pay. (Discounts and coupons) Price discrimination- A pricing strategy that charges customers different prices for the same product or service charging each customer the maximum price that they are willing to pay. (Discounts and coupons) Market power- the ability to control prices and total market output. Market power- the ability to control prices and total market output. Many businesses have some degree of market power

Examples of monopoly's The east India trading company The east India trading company Microsoft Microsoft Google Google

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questions 1 What is an example of a natural monopoly 1 What is an example of a natural monopoly 2 what does market power allow 2 what does market power allow 3 why does the government issue patents 3 why does the government issue patents 4 how can a monopoly be beneficial 4 how can a monopoly be beneficial 5 why would the government issue licenses 5 why would the government issue licenses 6 discounts and coupons are examples of _____ 6 discounts and coupons are examples of _____ 7 what is an example of a patent 7 what is an example of a patent 8 what is a example of a barrier of entry 8 what is a example of a barrier of entry 9 how did I do 9 how did I do 10 what is the purpose of a franchise 10 what is the purpose of a franchise

Bibliography Google Google Wikipedia Wikipedia etsy.com etsy.com entmoney.com entmoney.com crunchbase.com crunchbase.com