Monopoly is the exact opposite of a competitive market. It is characterized by the presence of only one seller and producer, which occupies the entire space in the market for a particular product or service. The opposite phenomenon is monopsony, where only one buyer in the market for a particular product or service has power.
Perfect monopoly - these are market conditions under which the product produced by the monopolist is unique and has no substitute products; it is impossible to enter the market for a number of reasons, as a result of which the manufacturer holds all power in his hands. In addition, the monopolist can significantly influence the setting of prices, but in this case, his power is still limited.
Making profits in such a market is very high. This is why more and more outsiders are being recruited into the industry, but how do monopolists fight such fierce competition? How do they manage to resist this onslaught and continue to dominate? To do this, consider the types of monopolies:
1. Natural. Occurs mainly in industriesproviding society with vital resources such as electricity, water, gas, transportation (such as urban transport), etc.
In this case, it is cheaper to supply the market with the necessary resources, and therefore production becomes more efficient.
There is a register of natural monopolies, which contains unified information about the economic entities involved.
2. Monopoly in terms of the organization's control over rare natural resources or knowledge. If a firm has special resources (oil, for example) or knowledge (patents), then it can dominate the market due to the fact that it is the only owner of them.
3. State monopoly is a market situation that is due to a natural monopoly (for example, rail transport). It is also a circumstance resulting from the fact that the influx of other non-state-type organizations into any industry is prohibited (for example, in the field of exports, imports).
4. Bilateral monopoly is a situation in the market when a monopsonist buyer opposes a monopoly producer (for example, when a monopolist provides a service to the state - the only buyer of this type of service).
There is such a thing as monopolistic competition. It is a type of market structure in which a significant number of sellers or manufacturers supply the market with similar, but not exactly the same products, whichdiffers in quality, design or any other features. Goods produced under monopolistic competition constitute one industry and one market (e.g. toothpaste, sportswear, soft drinks).
Thus, a monopoly is a state in which power belongs to one seller or producer. But in the presence of many buyers, such a situation on the market is deplorable. Often, the monopolist reduces output and raises the price of the product.
