In a monopoly, one firm holds the power to set prices. In an oligopoly, a few firms hold the power to set prices together. When only two firms hold the power to set prices in an industry, it is called a duopoly. A duopoly is a form of oligopoly.Know More
When a firm is so prominent in an industry that it contains the power to determine supply and demand, it is considered to have a monopoly over that industry. The prefix "mono" comes from the Greek "monos," meaning "alone" or "one." The prefix "olig" is from the Greek "oligos," which means "a few." Therefore, an oligarchy is when the same power held by one company in a monopoly is shared by a few companies.
There are several different types of oligopolies. There are those in which the few companies are actually working together to control a market, those in which the companies are working separately but simultaneously and those where one company leads the others but does not have a distinct enough advantage to gain power over them.
In both monopolies and oligopolies, firms control markets in either one of two ways. They either control the supply of a product or service, thereby increasing demand, or they control the pricing, thereby controlling what consumers pay.Learn More
Monopolies have a negative effect on the entire economy by making it harder for consumers to purchase goods, a trend that leads to lower production in the system. High prices do not affect only the consumer, they end up hurting the monopoly itself. Even systems with more than one competitor can be monopolistic if there are only a few. Competition benefits every human component in the economy.Full Answer >
Dr. Reed Fisher of Johnson State College lists the key characteristics of monopolistic competition as the number of firms in the market, the ease of access to the market and product differentiation. In monopolistic competition, there are many firms and entry into the market is free. Additionally, consumers can substitute products for each other, but they are not identical.Full Answer >
There is no supply curve in a monopolistic market because the monopolist searches the market demand curve for the profit maximizing price, rather than simply accepting the market price. Because there is only one seller, the monopolist has market power.Full Answer >
Unfair competition refers to all dishonest or fraudulent behavior that occurs within a trade environment. The term, which comes from intellectual property law, is most commonly used for the imitation or counterfeiting of a product by misleading the public to believe that a false product is the real deal.Full Answer >