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Different types of monopoly economics8/13/2023 because of different laws in countries, nobody can copy the designs which are registered under one brand name, patent or trademark. The monopoly which emerged because of any legal provisions like copyrights, patents, trademarks etc is called a legal monopoly. This type of monopoly gives a different outlook to monopoly meaning in economics differently. This monopoly came naturally to these countries. Mica in India, nickel production in Canada are good examples of natural monopoly. There can be natural causes for establishing a monopoly market, this type of monopoly is called a natural monopoly. In an imperfect monopoly, a firm produces a product, with the presence of close substitutes in the market. It is a very rare monopoly.Īn imperfect monopoly firm has a limited degree of power. ![]() They enjoy more monopoly power as compare to another type of monopoly.Ī pure monopoly firm has absolute monopoly power. Monopoly firm which controls all the supply of products as well as related things such forms of market structure is called a pure monopoly. ![]() On the other hand, discriminating monopoly firms charge a different price for the same quantity from different consumer. Price discrimination fails in case of markets having same elasticity- of demand.Types of monopoly meaning in economics Simple Monopoly and Discriminating MonopolyĪ firm that is charging uniform or similar prices for its products and services is called a simple monopoly. In markets with high elasticity of demand, low price will be charged, whereas in markets with low elasticity of demand, high prices will be charged. Implies that the elasticity of demand in the markets should differ from each other. The monopolists should be able to separate markets and avoid reselling in these markets. If buyers in one market come to know that prices charged in another market are lower, they will prefer to buy it in other market and sell in own market. A supplier can discriminate prices if there is no contact between buyers of different markets. Refers to one of the most important conditions for price discrimination. The buyer of one market cannot move to another market and goods sold in one market cannot be resold in another market. Implies that there must be two or more markets that can be easily separated for discriminating prices. First degree is practiced by lawyers and doctors. In this, consumers fail to enjoy any consumer surplus. This is also known as perfect price discrimination as it involves maximum exploitation of consumers. Refers to a price discrimination in which a monopolist charges the maximum price that each buyer is willing to pay. These three degrees of price discrimination (as shown in Figure-14) are explained as follows: The degree of price discrimination vanes in different markets.įigure-14 shows the degrees of price discrimination: In economic jargon, price discrimination is also called monopoly price discrimination or yield management. Price discrimination has become widespread in almost every market. For instance, an electricity supply board charges lower rates for domestic consumption of electricity and higher rates for commercial consumption. ![]() Occurs when different prices are charged according to the use of a product. This type of discrimination is also called dumping. Refers to price discrimination when the monopolist charges different prices at different places for the same product. ![]() For example, a doctor charges different fees from poor and rich patients. The different prices are charged according to the level of income of consumers as well as their willingness to purchase a product. Refers to price discrimination when different prices are charged from different individuals.
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