Do only monopolies have monopoly power?

Monopoly power is commonly associated with oligopolists and not just monopolists.

Firms in these markets use their monopoly power to construct entry barriers such as hugely expensive advertising campaigns that a new entrant firm cannot compete with. This deters new entrants into oligopolistic markets as well as monopolistic markets.

Oligopolistic markets are a prevailing situation where few firms dominate the market and just as in monopoly these firms are price makers. As a result the firms in these markets usually have a high concentration ratio, allowing them to benefit from economies of scale which is itself an example of monopoly power. They are therefore able to enforce predatory pricing and display other feature of monopoly power while not being monopolists themselves.

This idea of other firms other than monopolists having monopoly power is shown well by UK law designating firms with over 25% of a market's share as "statutory monopolies". Therefore firms classed as this would most likely be oligopolists such as Tesco who own 28.2% of the supermarket market share.

BP
Answered by Barnabas P. Economics tutor

2886 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

What two policies can the government employ to influence economic growth and inflation?


Describe the equilibrium point in the market


What effect would a fall in the interest rate have on GDP?


Examine two reasons Company A plans to merge with Company B


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 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences