Submitted to:- Submitted by:-

Prof. Darshpreet Bedi Bhoopendra Mahor

Satyendra singh Rajput
M.B.A. 1ST (B)
Monopoly

A market structure in which only one

producer or seller exists for a product
that has no close substitutes

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 Characterstics
Single Sellers

A pure monopoly is an industry in which a single firm is the

sole producer of a good or the sole provider of a service. This
is usually caused by barriers to entry.

No Close Substitutes

The product or service is unique in ways which go beyond

brand identity, and cannot be easily replaced (a monopoly on
water from a certain spring, sold under a certain brand name, is
not a true monopoly; neither is Coca-Cola, even though it is
differentiated from its competition in flavor).
Price Maker
In a pure monopoly a single firm controls the total supply of the
whole industry and is able to exert a significant degree of control over
the price, by changing the quantity supplied (an example of this
would be the situation of Viagra before competing drugs emerged). In
subtotal monopolies (for example diamonds or petroleum at present)
a single organization controls enough of the supply that even if it
limits the quantity, or raises prices, the other suppliers will be unable
to make up the difference and take significant amounts of market
share.

Blocked Entry
The reason a pure monopolist has no competitors is that certain
barriers keep would-be competitors from entering the market.
Depending upon the form of the monopoly these barriers can be
economic, technological, legal (e.g. copyrights, patents), violent
(competing businesses are shut down by force), or of some other type
of barrier that completely prevents other firms from entering the
 TYPES OF MONOPOLY
1. NATURAL MONOPOLY

If the supply of a commodity is localized in a single place, then the

monopoly is known as natural monopoly. Ex : Bangladesh possesses
the monopoly of Raw jute and India possesses the monopoly of
manganese.

2. LEGAL MONOPOLY

When a firm is given the legal right to produce a unique commodity ,

it is known as legal monopoly. Ex: The right of note issue has been
given by Law to the Reserve Bank of India only.
PRIVATE MONOPOLY

It is owned and operated by private individuals or organizations for

the purpose of getting maximum profits. Such monopoly is
established by liquidating the competitors. A simple private
monopoly charges single price for his product from all the
consumers. While, on the other hand, a discriminating monopoly
charges more than one price for the same product from different
consumers.
Legal Restrictions
 Patents, licenses, and other legal restrictions
(imposed by the government or some
governing body) provide some producers
legal protection from competition
 Patents – a way to protect inventors
(innovators) from having their creations
“stolen” by other firms or people
 Licenses – when the government grants the
exclusive right to supply a particular good or
service
 Examples of monopoly

1.Private monopoly

2.government monopoly
Examples of Private
monopoly

New Era Cap Company is the “exclusive supplier” of hats for Major League Baseball teams
 Reebok is the official supplier of NFL jerseys (go to
reebok.com to get your official Vince Young jersey!)
According to the Gillette website, the Gillette M3 Power razor is
protected by 62 patents
Examples of govt. monopoly
1. Indian railway
2. Mineral oils
3. Automic energy and nuclear energy
4. Electricity