Page 167 - DECO101_MICRO_ECONOMICS_ENGLISH

Micro Economics Ashwani Panesar, Lovely Professional University

Notes Unit 11: Monopoly

CONTENTS

Objectives
Introduction
11.1 Meaning and Features of Monopoly
11.2 Types of Monopoly
11.3 Price and Output Determination in Short Run

11.4 Price and Output Determination in Long Run
11.5 Price Discrimination under Monopoly

11.6 Economic Inefficiency of Monopoly
11.7 Summary

11.8 Keywords
11.9 Self Assessment
11.10 Review Questions
11.11 Further Readings

Objectives

After studying this unit, you will be able to:

State the features of monopoly
Identify the types of monopoly
Discuss the price and output determination in short run

Describe the price and output determination in long run

Explain the economic inefficiency of monopoly
Introduction

Monopoly is exactly opposite to the perfect competition. We can define a Monopolist as a sole
supplier to particular market. In fact, after going through this unit you will realise that monopoly
is an extreme case and it is rarely found in practice. However, we may also understand the case
of monopoly by analysing two different cases – one that is presented in textbooks which says that
in a monopoly there is only one firm producing the good. And other, the real world case such as

the operating system monopoly, that says that in monopoly there is one fi rm that provides the
overwhelming majority of sales (say, for example Microsoft), and a handful of small companies
that have little or no impact on the dominant firm. In this unit, we will stress more on the former

case.
11.1 Meaning and Features of Monopoly

Monopoly is said to exist when one firm is the sole producer or seller of a product which has

no close substitutes. According to this definition, there must be a single producer or seller of

162 LOVELY PROFESSIONAL UNIVERSITY