Monopoly is
defined as the market situation where there is a single firm selling a product
for which there is no close substitute available in the market. The firm
represent the entire industry
In monopoly
there is only a single seller of a particular product.
The
following are the key conditions of monopoly
a) Single firm
or producer
b) No close
substitute of the product
c) Barriers for
the entry of the new product. It means there is difficult for other people to
start that type of business
d) Firm
represents the whole industry. It mean all market share has the only a single
firm
There are many causes of the monopoly. Some are the
important causes
1) The firm
has the control over the essential raw material which is required for the
production of goods, Due to this control the other people not have access to the raw material and this
will lead to the monopoly
2) Business combination
is the one of the reason. Due to business combination the single firm take over
the business of its competitor and get all the market share.
3) Research
and modern methods of production is one of the cause of monopoly. If a business
has the modern technology and advanced research and development, then it will
make a product which would be unique and that will lead to monopoly .
Monopoly
has the many disadvantages
It lead to high price. If a single firm dominate the
market, it will charge the price which it want. The monopolist is powerful to
charge higher price. Some time they charge low price due to restriction of
government and to create the new entry barrier for other business mans.
monopoly lead to the exploitation of consumer if the form of
charging higher price, not providing quality of services , because the
customers has no other option.
