Market Structures 1 - Monopolies
The features, equilibirum, transport relevance of monopolies as well as natural monopolies
- Created by: TessAni
- Created on: 18-01-13 15:52
View mindmap
- Monopolies
- Features
- Supernormal profit is possible in both the long run and short run
- High barriers to entry
- Key problem - whether firms can command a so-called monopoly price
- Competition Act aims to reduce anti-competitive behaviour
- Companies can act as monopolies despite there being more than one firm
- Price Discrimination
- Monopolies
- Features
- Supernormal profit is possible in both the long run and short run
- High barriers to entry
- Key problem - whether firms can command a so-called monopoly price
- Competition Act aims to reduce anti-competitive behaviour
- Companies can act as monopolies despite there being more than one firm
- Price Discrimination
- Where a monopolists charges different prices for the same product in different markets
- Rail passenger market - commuters v. off peak (dependent on PED) or airlines and time (how far ahead you book)
- Equilibrium
- Will choose the profit maximisation level - where MC = MR
- Natural Monopolies
- Where a monopolist has an overwhelming cost advantage - ownership of resources for instance
- Fixed costs very high proportion of total costs
- Output increases average costs fall - offering substantial benefits to be gained from economies of scale
- If it behaves competitively - with low prices - then this can be loss making so subsidies are needed or it can be public sector completely
- Transport Relevance
- Railways - new infrastructure is a waste of resources + accessibility
- Govt. gives annual payment to 17/20 franchises because they are essential
- There are some areas of true competition but even these have restrictions as to where trains can pick up and drop off passengers - East Coast Main Line
- Features
- Where a monopolists charges different prices for the same product in different markets
- Rail passenger market - commuters v. off peak (dependent on PED) or airlines and time (how far ahead you book)
- Monopolies
- Equilibrium
- Will choose the profit maximisation level - where MC = MR
- Natural Monopolies
- Where a monopolist has an overwhelming cost advantage - ownership of resources for instance
- Fixed costs very high proportion of total costs
- Output increases average costs fall - offering substantial benefits to be gained from economies of scale
- If it behaves competitively - with low prices - then this can be loss making so subsidies are needed or it can be public sector completely
- Transport Relevance
- Railways - new infrastructure is a waste of resources + accessibility
- Govt. gives annual payment to 17/20 franchises because they are essential
- There are some areas of true competition but even these have restrictions as to where trains can pick up and drop off passengers - East Coast Main Line
- Features
Similar Economics resources:
Teacher recommended
Comments
No comments have yet been made