1. Definition, Causes & Antitrust Laws Chapter 15
Monopolies
Definition, Causes & Antitrust Laws
Chapter 15

2. 4 Market Structures Lowest Price Highest Quantity Highest Price No DWL
Lowest Quantity
Largest DWL
Perfect
Competition
Monopolistic
Competition
Monopoly
Oligopoly
Most competitive
Least competitive

3. Monopoly 5 Market Characteristics
Perfect Competition
# Sellers
Product
Entry/Exit
Information
Price
Control
One Seller
Unique Product—no substitute
Difficult/Impossible
Limited Information
Great deal of price control— Price Setter
Unlimited
Homogenous
(Exactly Same)
Free, quick
Perfect Info.
No Price Control
(price taker)

4. Barriers to Entry
Primary cause of a monopoly industry is Barriers to Entry
Barriers make it difficult to “enter the market”
3 Primary Barriers to Entry:
1) Ownership of a key resource
2) Government gives one firm the exclusive right to produce
3) Costs of production make a single producer more efficient

5. Natural Monopolies
A Natural Monopoly is when a single firm can supply a good/service at a lower cost
They develop in industries with large economies of scale
Examples:
Utilities:
Electricity,
Gas &
Water
Qty Produced => ATC

6. Government Regulation
Antitrust laws (1890) - a collection of statutes aimed at curbing monopoly power by:
Breaking up companies
Preventing mergers
Regulating pricing
Perfect Together?

7. Proposed Merger in 2014 wanted to buy
Would 2 companies have been enough competition?

8. Final decision: Government denied the merger of ATT with T-Mobile

9. Anti-trust law video 14 minutes