Monopoly
Updated on March 6, 2023
Monopoly means a situation in market or economy where a single business or firm is the only business or supplier of a particular product or service. It has no competition and is thus free to fix and charge prices of goods or services it supplies. Hence, it controls the entire market in that product.
Is Monopoly good for businesses?
A Monopoly is advantageous for business operating in that environment since:
a. Businesses can charge prices which suit them for maximising profits
b. In absence of competition, they can control the entire value chain including infrastructure, materials, logistics and in a way, control the end product or service offering
How can Monopoly affect businesses?
Monopoly can be disadvantageous from a customer’s perspective, because:
a) As there is a single producer or seller, customers do not have ample choices or options
b) In absence of competition or entry barrier, entry of new suppliers will be restricted and hence costs would not go down
c) There is no mechanism to compare or match the quality or quantity of a product or service
