In the short-run, the monopoly firm attains equilibrium when its profits are maximised or losses are minimised. Conditions for Price Discrimination: The index of monopoly power will, therefore, vary between zero and unity. Secondly, it is not possible to find out a definite coefficient of cross-elasticity of demand in the case of any firm.
Sometimes transport costs are so high that they act as a safeguard against the return of dumped goods. For instance, a rich man cannot become poor for the sake of getting cheap medical facilities. The difference between price and marginal cost is the measure of the degree of monopoly power.
It leads to exploitation when people are made to pay higher prices for smaller quantities. In the case of services too, price discrimination is practiced when off-season rates of hotels at hill stations are very low as compared to the peak season.
Different prices can be charged in separate markets based on differences of elasticity of demand. Seventh, the sole manufacturer of a product may adopt a limit pricing policy in order to prevent the entry of new firms. Less is charged for the transportation of coal than for bales of cloth on the same route.
Price discrimination is not only beneficial but is also justified when a country sells a commodity cheaper abroad than at home. To regulate monopoly, the government imposes price ceiling so that monopoly price should be near or equal to competitive price.
Again the index of monopoly power may be the same in case of two firms. Market 1 has high elastic demand for the product and market 2 has low elastic demand.
He will view his demand curve as elastic, and sell more at a low price. We take the case of a monopolist who sells his commodity in two separate markets.
At this level, the monopolist would earn only normal profits. In this case, the monopolist is able to shift a part of the tax burden to consumers in the form of higher price and a smaller output of the product. He is also a price- maker who can set the price to his maximum advantage.
Moreover, if the seller is a monopolist, the difference between price and marginal cost is always there.- Market Structures McConnell and Brue () describe four market structures that companies align themselves with during the course of their corporate lives.
This paper will give examples of the four market structures: Pure Competition, Pure Monopoly, Monopolistic Competition and Oligopoly. Before s, there was a monopoly market structure in telecommunication industry.
Turkish Telecom Company had that sector with legal monopoly. In July ofTurkish telecom and Turk cell, Telsim companies signed mobile phone system contract for share revenues.
Both of the companies paid million U.S. dollars for license fee. The second market is called a monopoly market structure. The third market is called monopolistic competition market structure.
The final market is called oligopoly market structure. Each market structure is different and both. - Distinguish Between the main Features of Perfect Competition and Monopoly Market Structure There are three main features that distinguish between a perfect competition and monopoly market structure: the type of firm, the freedom of entry and the nature of the product (Sloman and Norrispg, ).
Number of firms in oligopoly market are few and monopoly market is just one. Freedom of entry. In perfect and monopolistic competition market, new firms are unrestricted and competitor had freedom to enter the market.
For oligopoly and monopoly market, new firms are restricted or completely block. In this essay we will discuss about monopoly market. After reading this essay you will learn about: 1. Meaning of Monopoly 2. Sources and Types of Monopoly 3. Monopoly Price Determination 4.
Degree of Monopoly Power – Its Measure 5. Meaning of Monopoly Price Discrimination 6. Types of Price Discrimination 7. Conditions for Price .Download