Monopoly Vs Monopoly Essay

A perfect competition and a monopoly are two very different and unique market structures. Under monopolies firms get normal profits only in the short period, but disappears in the long run. Monopolies come with strong barriers to enter and exit the market. Under a monopoly, a monopolist can charge different prices and no one can complain because everything is being ran by one big business. In a monopoly the average revenue curve slopes downward, and the demand curve is very inelastic. Both monopolies and perfect competitions want to maximize profits, although monopolistic prices are usually higher. A pure monopoly is rare like a perfectly competitive market, but there are elements of monopolies in some markets. In this paper I will go into detail about both of these markets.

A Perfect competition is a market structure made up of many firms, none of which are large enough to influence the industry (Economics online). When a

That gives it a tremendous competitive advantage over any other company that tries to provide a similar product” (The Balance). Most industries become monopolies through vertical integration. (The Balance). This means that one person controls the entire supply chain from retail to production. Monopolies are not necessarily a good thing. They restrict free trade and prevents the market from setting prices. Since there is one company that runs one specific good, they can set any prices they want, also known as price fixing. (The Balance). “Monopolies lose any incentive to innovate. They have no need to provide "new and improved" products. A 2017 study by the National Bureau of Economic Research found that U.S. businesses have invested less than expected since 2000” (The Balance). Monopolies can also create inflation. Since they can set any price they want, they have no problem in raising prices. This is called a cost-push inflation. A good example of this would be