Monopoly market is not a new type of market because it has been in use since a long time but now due to capitalism and globalization this market is decreasing. These markets were more prevalent in old times because in old times there were different sellers of different items and only, they could sell those items, but now this is happening less.
The word monopoly is derived from the Greek word and is made up of two words, “mono” meaning “one” and “poly” meaning “seller”. Only the word monopoly is derived from Greek, not the concept.
Mono – One
Poly – Seller
Note: Due to capitalism and globalization, the monopoly market is decreasing, and this should also happen because the market is considered healthy when there is competition in the market, which leads to improvement in quality and price.
Table of Contents
What is a Monopoly Market?
Meaning of Monopoly Market
Monopoly is a market situation in which there is only one seller or firm and a large number of buyers. In this market, only one firm controls all market activities and there are no close substitutes for the products because only one firm sells the products.
A monopoly market is supported by the government because without the support of the government, the formation of a monopoly market is not possible. In most of the cases the government owns the monopoly market because nowadays the government rarely provides monopoly market to the private entity.
Definition of Monopoly Market:
According to Irving Fisher – “A monopoly is a market where there is no competition, resulting in a situation where one specific person or firm is the only supplier of a certain commodity or service.”
According to Koutsoyiannis – “Monopoly is a market situation in which there is a single seller and there are no close substitutes of the commodity it produces and there are barriers to entry of the firm.”
According to own words – “Monopoly is a market situation in which there is only one seller or firm and a large number of buyers, and the seller has complete control over the market, and there are no close substitutes for the products etc.”
Features of Monopoly Market
Following are the features of a monopoly market.
1. Single Seller and Large Number of Buyers:
In a monopoly market there is only one seller or manufacturer of a product and a large number of buyers because this market is formed only when this condition is fulfilled. If this condition is not fulfilled, then a monopoly market will not be formed. For example, If the number of seller exceeds one, the condition will not be met, creating a monopoly market.
2. No Close Substitute:
In a monopoly market, there are no close substitutes for the products because no other firm can make or sell the same product. A monopoly market is supported by the government and the government provides the right to create a monopoly market. If any other seller enters this market they may be penalized.
3. Restrictions on Entry:
In a monopoly there is a legal restriction on the entry of a new firm into the market because only one seller has the right to create a monopoly market for a specific product. The state government decides whether to create a monopoly market for specific products or not.
4. Price Maker:
In a monopoly market, sellers set their own prices for goods and services because only they control the market but sometimes the government imposes some types of restrictions in pricing.
5. Price Discrimination:
In monopoly market, price discrimination is more as compared to other market because the seller sets the price as per his own but nowadays various types of laws monitor this type of activity.
6. Incomplete Knowledge:
In a monopoly market, the consumer has incomplete information about the products because there is only one seller or manufacturer of a product but nowadays many laws have been made under which it has become mandatory for the seller to give complete information about the product.
Read Also:
- What is market? Meaning, features and more.
- Types of market
- What is a perfect competition market? Meaning, features, and more.
- What is a monopolistic competition market? Meaning, features, and more.
- What is a duopoly market? Meaning, characteristics, and more.
- What is an oligopoly market? Meaning, features, and more.
- What is oligopsony market? Meaning, features and more.
- What is a monopsony market? Meaning, features, and more.
- What is bilateral monopoly market? Meaning, features, and more.
- What is duopsony market? Meaning, features, and more.
QNA/FAQ
Q1. What is a monopoly market?
Ans: Monopoly is a market situation in which there is only one seller or firm and a large number of buyers. In this market, only one firm controls all market activities and there are no close substitutes for the products because only one firm sells the products.
Q2. Write the features of monopoly market.
Ans: Following are the features of a monopoly market.
1. In a monopoly market, there is one seller and a large number of buyers.
2. In a monopoly market, there are no close substitutes.
3. In a monopoly market, there are restrictions on the entry of new firms.
4. In a monopoly market, the seller is a price maker.
5. In a monopoly market, Price discrimination occurs.
6. In a monopoly market, buyers have incomplete knowledge.
Q3. Is the monopoly market decreasing?
Ans: Yes, due to capitalism and globalization, the monopoly market is decreasing.
