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

2964 Views

See similar Economics A Level tutors

Related Economics A Level answers

All answers ▸

Explain what is meant by the rate of inflation and  analyse the main causes of inflation


How can the central bank affect economic activity using monetary policy


Evaluate the likely effects of fluctuations in sugar prices on a sweet company.


Analyse how barrier to entry determine the degree of competition in the British transport market.


We're here to help

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

© MyTutorWeb Ltd 2013–2025

Terms & Conditions|Privacy Policy
Cookie Preferences