Disadvantages and advantages of monopolies

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  • Created on: 21-01-13 15:49
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MONOPOLY
ADVANTAGES DISADVANTAGES
Supernormal profits= finance Les incentive to be efficient
for investment, create and develop new products
reserves to overcome ST Raises barriers to entry
difficulties= stability to Higher prices and lower
employment, fund for R&D output for domestic
Power= financial power to consumers
match large overseas Misallocation of resources
competitors by setting prices above MC
Avoids undesirable
duplications of services
Incentive for rival firms to
break down the monopoly
through creative destruction

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