Explain the main sources of monopoly power.

 - Barriers to entry, for example patents, restrict the number of competitors in a market. They may be deliberate, e.g. patents, or inherent in the good, e.g. water. Where they are inehrent, a 'natural monopoly' occurs. Monopolies may be a single firm in the market or created through collusion or cartels at the production or selling stage.

 - Advertising and product differentiation can help to enlarge perceived differences in products. This reduces the elasticity of demand for certain products and enables one firm to take control of a market, e.g. Apple.

 - Lack of consumer infromation can also allow monoply power to build up, as consumers are unaware of all of their options and therefore may be deceived into buying a certain product, allowing monoply power to build up.

Answered by Beth P. Economics tutor

68567 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Explain the potential impacts on the global economy of sustained trade imbalances (25 marks)


What is unitary price elasticity of demand?


Does a higher NMW increase the distribution of income?


Using Angola as an example, evaluate the view that MNCs play a positive role in the development of LEDCs. (25 marks)


We're here to help

contact us iconContact usWhatsapp logoMessage us on Whatsapptelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

© MyTutorWeb Ltd 2013–2024

Terms & Conditions|Privacy Policy