Most public utilities would fall into this category. Natural Barriers to Entry - In these type of monopolies, other firms cannot enter the market because either the startup costs are too high, or the cost structure of the market gives an advantage to the largest firm.Patents are tools that governments use to promote innovation, as companies should be more willing to create new products if they know they'll have monopoly power over those products. Pfizer, inventors of the drug Viagra, have a patent on the drug, thus Pfizer is the only company that can produce and sell Viagra until the patent runs out. A patent gives the inventor of a product a monopoly in producing and selling that product for a limited amount of time. Patents - Patents are a subclass of legal barriers to entry, but they're important enough to be given their own section.In many jurisdictions alcohol can only be sold by the government-run corporation, creating a legal barrier to entry in this market. In the United States, only the USPS can deliver first class mail, so this would be a legal barrier to entry. Legal Barriers to Entry - This is a situation where a law prevents other firms from entering the market to sell a product.For example, a product that is being sold at a relatively affluent area would be priced more than the same product that is being sold at a poor. They charge a price based on what they think the consumer would agree to. Price discrimination – This selling strategy is employed by monopolies wherein they charge different prices for the same product in different markets.This allows them to indulge in charging excessive prices for their commodities. Monopolies have the power to determine the price of their commodity without having to analyse competitor prices since there are virtually o competitors. Higher prices – A monopoly is essentially a price maker.Since there are no close substitutes, consumers have no option but to buy these inferior products. Monopolies also offer inferior products and services in an attempt to save on the cost of production. A good example of this could be Blackberry, a cellphone brand that captivated the global market in the early 2000s but has now been compelled to discontinue making its own smartphones in 2016. They tend to not engage in innovating, and so, many monopolies go out of trend for the same. Affects the quality of products and services offered – Due to a lack of competition, monopolists often do not realise the need to upgrade.Below listed are the disadvantages of a monopoly: The disadvantages of a monopoly in an economy often outweigh its advantages. Joint Monopoly – When two or more firms join hands in order to form a monopoly, it is referred to as a joint or a shared monopoly.Technological Monopoly – When a firm holds a technologically superior position that other firms cannot compete with, the firm is said to be a technological monopoly.Natural Monopoly – A natural monopolist enjoys or benefits from natural factors like locational advantages, locational reputation, natural talents and skill sets of the producers, etc.Legal Monopoly – A legal monopolist enjoys government approved rights like trade mark, patent, copy right, etc.Price discrimination is witnessed wherein prices may vary from region to region, or people coming from different economic backgrounds may be charged a different price, etc. Discriminating Monopoly – A discriminating monopoly is one where a single seller does not sell his product or service for a single price.There is no price discrimination in a simple monopoly. Simple Monopoly – A simple monopoly is one in which a single seller sells its product or service for a single price.Imperfect Monopoly – The monopolist controls the entire market supply for its product as there is no close substitute, but there is a remote substitute for the product available in the market.This is possible because there is absolutely no close or remote substitute available in the market. Pure/ Absolute Monopoly – The monopolist controls the entire market supply for its product without facing any form of competition.An example of a public monopoly would be the U. These monopolies are set up for the welfare of the masses. Public Monopoly – A public monopoly is one that is owned by the government.Private Monopoly – A private monopoly is one that is owned by an individual or a group of individuals. ![]() These different types of monopolies are listed below: ![]() There exist several different types of monopolies in an economy.
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