Pure Monopoly in the Market Structure, Economic Definition and Meaning..
Monopoly is an economic term attributed to a market scenario where there is an absolute domination of an enterprise or person or more precisely an economic entity has utter ascendancy over the production or supply of certain good or provision of some specific service. Or Pure Monopoly is a market structure where there is only one producer of a product, which has no close substitute is available. In this market structure only one firm produces and supplies a product. The product produced by a monopolist is distinctive in a sense that no other producer is producing that particular product or else no similar product or close substitute is being produced. In pure monopoly a single firm represents the whole industry. A buyer has to purchase that good from the monopolist only otherwise remain without it. Because no other producer is producing that particular commodity neither that exacting product has any close substitute. In this sense in pure monopoly the monopolist has supreme authority over the production and supply of a product.
Characteristics of Pure Monopoly
These are the few central characteristics of monopoly: Single Seller or Producer In pure monopolistic market structure there is only one seller or producer of a certain good. He has the absolute domination over the production and supply of that good. A single producer or seller represents the entire industry. No close Substitute In pure monopolistic market structure there is no similar or close substitute of the product produced by the monopolist. It means that the buyer is compelled to purchase that good from the monopolist as he is the only manufacturer and supplier of the good. Price Maker A pure monopolist is a price maker the same as a competitive firm is a price maker. In pure monopoly the monopolist controls the whole production and supply as well hence he can control the price of the product by controlling the supply or quantity produced of the good. In this way he can cause his desired change in the price of the good.
Entry is Blocked Somehow
In pure monopolistic market structure the entry of new suppliers or producers is someway blocked. There are barricades in entry and exit into the market because of the lack of direct competition. Barriers to Entry are the aspects that proscribe the firms from entering an industry. They are; Economies of Minimum Efficient Scale Lawful Obstacles Ascendancy over resources Pricing and strategic Hurdles Monopoly is one of the important market structures. It helps in understanding the Industrial Organization and Regulatory Economics. Mostly a monopolistic entity is headed by the government. But there are a number of examples of private monopolies. Examples may embrace; US steel, American telephone and telegraph, Netherlands East India Company, Microsoft, Western Union etc. Thus, monopoly is a vast aspect because of the fact that there are a lot of factors that determine pure monopoly in a certain industry. Though, it is criticized but is an important market structure and has a considerable effect on market.