Monopoly

Monopoly

Introduction

A monopoly is the only producer of a good for which there are no close substitutes. This puts the monopolist in a unique position: It can raise its price without losing consumers to competitors charging a lower price. Thus, the monopolist is the industry and faces the downward-sloping market demand curve for its product (Posner, 2005). The monopolist can choose any point along that the demand curve; it can set a high price and sell a relatively small quantity of output, or it can lower price and sell more output.

Monopoly has although been a system of great critique, but has ...