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The firm then attempts to maximize profits in each segment by equating MR and MC, [52] [61] [62] Generally the company charges a higher price to the group with a more price inelastic demand and a relatively lesser price to the group with a more elastic demand. [63] Examples of third degree price discrimination abound.
The companies will enter when the existing companies are making super-normal profits. With the entry of new companies, the supply would increase which would reduce the price and hence the existing companies will be left only with normal profits. Similarly, if the existing companies are sustaining losses, some of the marginal firms will exit.
[1] [4] [2] The American firm Alcoa Aluminum is a historical example of a monopoly due to natural resource control; its control of "practically every source of bauxite in the United States" was one key reason that "[it] was, for a long time, the sole producer of aluminum in the United States". [4]
In economics, a government-granted monopoly (also called a "de jure monopoly" or "regulated monopoly") is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of government enforcement.
Examples of monopoly rent include: rents associated from legally enforced knowledge monopolies derived from intellectual property like patents or copyrights; rents associated with 'de facto' monopolies of companies like Microsoft and Intel who control the underlying standards in an industry or product line (e.g. Microsoft Office); rents ...
For example, claims of natural monopoly are often used as justification for government intervening to establish a statutory monopoly (government monopoly or government-granted monopoly) where competition is outlawed, under the claim that multiple firms providing a good or service entails more collective costs to an economy than would be the ...
A state monopoly can be characterized by its commercial behavior not being effectively limited by the competitive pressures of private organisations. [1] [2] This occurs when its business activities exert an extensive influence within the market, can act autonomously of any competitors, and potential competitors are unable to successfully compete with it.
Presence of monopoly elements: as long as products are differentiated, the firms enjoy some monopoly power, as each product will have some loyal customers. It is the most basic form of oligopoly; Barriers to entry: high entry barriers are often present in duopolies, making it difficult for new firms to enter the market.