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.

BP
Answered by Beth P. Economics tutor

77777 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Explain the difference between productive efficiency and dynamic efficiency.


What is the impact of deflation?


Integrate the function f(x) = (1/6)*x^3 + 1/(3*x^2) with respect to x, between x = 1 and x = 3^(1/2), giving your answer in the form a + b*3^(1/2) where a and b are constants to be determined.


How do I answer an economics essay question?


We're here to help

contact us iconContact ustelephone icon+44 (0) 203 773 6020
Facebook logoInstagram logoLinkedIn logo

MyTutor is part of the IXL family of brands:

© 2025 by IXL Learning