Monopoly Flashcards
How do firms achieve monopoly power
Merger and takeover Statutory monopoly Cost barriers Internal expansion Branding
How does merger and takeover help a firm achieve monopoly power
Two firms come together so less firms in the market
How does statutory monopoly help a firm achieve monopoly power
Government can choose to give key industries monopoly power e.g water companies
How does cost barriers help a firm achieve monopoly power
Large firms👉🏾internal economies of scale👉🏾small firms cant enter market
How does internal expansion help a firm achieve monopoly power
Increased market share by investing in capital
How does branding help a firm achieve monopoly power
Creates customer loyalty e.g heinz ketchup
Benefits of monopolies
Firm grows - internal economies of scale
Firms can reinvest- better quality
Compete in foreign markets
Cost of monopolies
Less competition
Firms have little incentive to improve
Difficult for smaller firms to enter market
