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Monopoly - Coggle Diagram
Monopoly
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Barriers to Entry
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Patent, trademark and copyright
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Price discrimination
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Disadvantages
Can be used as a pricing tactic to reduce competition and reinforce the market dominance of leading firms.
May lead to manipulation of groups with a price inelastic demand, not all of whom are on high incomes.
Price discrimination operates mainly in the interests of producers as they extract consumer surplus and turn it into extra profit.
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advantages
Helps generate cash flow for business with can ensure their survival during a recession/tough economic times
Can help fund the cross-subsidy of goods and services for example premium prices for some can fund discounts for other groups.
Make better use of space capacity leading to less waste and unsold stock. There are potential environmental benefits from this strategy.
Higher monopoly profits can finance research with drives improved dynamic efficiency and can lead to important social benefits.
Vertical integration
Forward
is when a factory start selling its product directly to consumers without passing through retailers.
Backward
backward integration involves buying part of the supply chain that occurs prior to the company's manufacturing process
Definition
A dominant firm is one which accounts for a significant share of a given market and has a significantly larger market share than its next largest rival.