Monopoly is a market structure in which there is only one firm. Its characteristics are:
- Monopoly is a market structure dominated by single seller.
- In pure or absolute form of monopoly a single seller is the sole producer of good or service.
- A firm or the industry is the same thing.
- No close substitute-the product of monopoly is unique in a sense that it has no close substitute. Anyone who does not want to buy the product form the monopoly will have to live without it.
- The pure monopolist control the total quantity supply and has considerable control over the price of product, thus the monopolist is the price maker (in pure competition every firm is price taker).
- In pure monopoly there is single firm and there are no immediate competitors because certain barriers prohibit entry these barriers may be economic, technological, legal or any kind of barrier.
- Entry in pure monopoly is blocked. There are strong barriers that effectively block strong competition. Somewhat weaker barrier permit oligopoly. A market structure dominant by few firms. Still weaker barrier may permit the entry of fairly large numbers of competitors giving rise to monopolistic competition. No barrier means perfect competition.
March 18, 2019