Question

what are The Sources of Monopoly Power? Briefly explain each

what are The Sources of Monopoly Power? Briefly explain each

Homework Answers

Answer #1

The sources of monopoly power are as follows

  1. Barriers to entry – There must be barrier to entry in the market, either by bond or anything so that no other firms can enter into the market.
  2. No close substitute – The product a monopoly firms sell must not have any close substitute because if there is one, then as soon as the price of the product will increase people will shift to its substitute.
  3. Number of competititors –The number of competitors must be very small due to very high cost of production or due to technological differences.
  4. Advertisement and product differentiation – The firm must advertise its product in such a way, that the product must look completely different and unique . With the ability of capturing the eyes of lots of customers.
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