What are the characteristics of a monopolistic market?

A monopololistic market exists when there exists only one supplier of a good or service, but there are many consumers. Some key characteristics of a monopolistic market are price maker, high barriers to entry and product differentiation. In a monopolistic market, the monopoly has full control of the market since there is no other competitors. The monopoly can thus set its price and quantity supply based on its Marginal Revenue and Marginal Cost, i.e produce at where MR=MC for profit maximization. Furthermore, since monopoly can gain supernormal profit from selling their goods/serivce. They will have the ability to invest in research and development in order to differtiate their product and block potential competitors join the market.

Answered by Zhen X. Economics tutor

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