In economics, monopoly is a market type in which a single firm competes.
In this type of market there are high barriers to entry. These include:
- Economies of scale
- Government licensing
- Patent rights
- Control of a key resource by the firm
The firm operates to maximize profit. This leads to higher prices and lower output than would be the case under perfect competition.
The firm can also gather all the profit to itself by selling its product at different prices to different customers. This is called price differentiation. To some extent, oligopolies also practice this.
Related Fool Articles
Related Community Blogs
- Barriers to entry
- Law of supply and demand
- Monopolistic competition
- Perfect competition
Recent Mentions on Fool.com
- 5 Things Visa Inc.'s Management Wants You to Know
- DigitalGlobe, Inc. Earnings: Finally Time to Focus on Growth
- Even the McRib Can't Save McDonald's Now
- Is Comcast's Time Warner Cable Acquisition in Jeopardy?
- Sirius XM Holdings Inc. Earnings: Pump Up the Volume
- Peter Thiel Exclusive: How to Invest in Tech Stocks