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 about Economics
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 >
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 >
The advantages of a monopoly include reducing resource waste, improving efficiency due to better investments, providing discounts to the economically weak and investing in research and development; some disadvantages include poor service, low quality goods and higher prices, no consumer sovereignty and no competition. When a monopoly has low competition, this may result in consumers getting goods that are either out of date or low in quality.Full Answer >
A natural monopoly occurs when a single company is the most efficient way to supply a good or service. In this situation, one large supplier has a cost advantage over any potential competitors.Full Answer >