Theory of Monopoly

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  • Created by: sammilaw
  • Created on: 16-11-15 09:38
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  • Theory of Monopoly
    • Chapter 4
    • Barriers to entry (The 3 Ss)
      • Structural - difference in production costs
        • Ownership or control of a scarce resource
        • Economies of scale
        • Network effects i.e. popularity of social media
        • High set up costs i.e. sunk costs
        • High R&D costs
      • Strategic
        • Hostile takeovers or integration
        • Limit or predatory pricing
        • Product differentiation i.e. branding
        • Advertising costs - sunk costs
      • Statutory - entry barriers given force of Law
        • CopyRight or patents
    • Barriers to exit
      • Capital inputs that are specific to an industry so would have little or no resale value
      • Money spent on advertising, marketing and R&D which cannot be carried forward to another industry


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