1. Monopolies

2. Monopoly and its Characteristics
Single Supplier of goods
there is only one seller of a product that has no close substitutes.
The company is the price marker. There is no competition, they can set their own prices.
Example: De Beers Diamonds once produced more than half of the world’s diamonds supply.

3. Barriers to Entry
other companies may want to enter the market, but there is something that hinders or prevents them from entering.
This comes from three main sources:
Resource is owned by a single company
Government gives a single company the exclusive rights to produce something.
The costs of production are expensive and complicated so a single producer is more efficient than many producers.

4. Natural Monopoly & DTE Energy
Types of Monopolies
Natural Monopoly & DTE Energy
exists when the costs of production are lowest when only one firm provides output.
Example: Most public utilities. (electricity, natural gas, sewage, & water)
Because the system of getting electricity to people in homes and business is very complex and costly. It makes sense that one company would undertake it and provide it for all people in an area.

5. Government Monopoly & Secretary of State
exists when the gov’t either owns and runs a business or authorizes only one producer to create goods/service.
The gov’t provides these goods/services that either could not be provided by private firms or that are not attractive to them because of the lack of profit opportunities.

6. Geographic Monopoly: Gas Station
Technological Monopoly: Polaroid
through the use of gov’t issued patents firms are able to exclude other firms from competing with them.
Example: Polaroid had a patent over instant cameras and film which prohibited Kodak from making one as well.
Geographic Monopoly: Gas Station
Example: You own a gas station on a rural stretch of road and there is not another one for 100 miles. You can charge a high price because people will be forced to buy it or they will run out.