Monopoly Flashcards
1
Q
Advantages of Monopoly
A
It can be the most efficient and lead to lower costs
Exploit economies of scale to reach minimum efficient scale
Supernormal profit can be made- then be used for R+D leading to dynamic efficiency
Makes it easier for governments to regulate
2
Q
Disadvantages of Monopoly
A
Higher prices for consumers
Less choice for consumers
There is less incentive to cut costs due to lack of competition
There is less incentive to innovate and invest
They are productively, allocatively and x-inefficient
Potential for dis-economies of scale
May hold monopsony power
Could gain a degree of political power
