Definition of Monopoly

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Monopoly refers to a market structure whereby there is only a single firm operating in an economy. In markets that have one firm controlling the supply of some important products or raw materials, consumers find it difficult to purchase goods at prices that are convenient as they have to conform to whatever has been set by companies. Companies that have monopoly power set their own prices since unlike in a perfectly competitive market where operations are guided by demand and supply forces, they know that the market they serve can hardly do without them. Basically, monopoly is normally characterized by the absence of competition in the market. It is apparent that competition is always important in enhancing the welfare of consumers since firms that have monopoly power do not mind the quality of the products and services offered given that their main concern is often profit maximization (Spence, 1975). Monopoly is also likened to the extreme cases of capitalism where business entities engage in business activities with the view of extorting consumers so that they may attain much success. Though monopolies engaged in production of services and products may affect consumer welfare, government sanctioned monopolies meant to provide essential goods are beneficial. In a monopoly market, the availability of single producers or sellers supplying some widely consumed products makes entry into the market difficult compared with perfect competition structures where there are several sellers and buyers who are free to enter or exit. Monopolists take advantage of the fact that there are often no close substitutes for the products offered in the market thereby leaving consumers with no choice other than spend much money to the benefit of th... ... middle of paper ... ...ip Development: Past, Present, and Future.” Human Resource Planning. 24-32. http://www.ccl.org/leadership/pdf/research/cclLeadershipDevelopment.pdf Holloway, Joseph. “Leadership Behavior and Organizational Climate: An Empirical Study in a Non-profit Organization.” Emerging Leadership Journeys 5. 1 (2012): 9-35. http://www.regent.edu/acad/global/publications/elj/vol5iss1/ELJ_Vol5No1_Holloway_pp9-35.pdf Hurley, Thomas and Juanita Brown. “Conversational Thinking: Thinking together for a Change.” Oxford Leadership Journal 1.2 (2010). http://www.oxfordleadership.com/journal/vol1_issue2/olj_vol1issue2.pdf Melchar, David and Susan Bosco. “Achieving High Organization Performance through Servant Leadership.” The Journal of Business Inquiry 9.1 (2010):74-88. http://www.uvu.edu/woodbury/jbi/volume9/journals/achieving_high_organization_performance_through_servant_leadership.pdf
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