Monopoly is the opposite of a competitive market

Monopoly is the direct opposite of a competitive market. It is characterized by the presence of only one seller and producer, which occupies all the space in the market for a particular product or service. The opposite phenomenon is a monopsony, where only one buyer in the market of a certain good or service possesses power.

The perfect monopoly is such conditions on the market in which the product produced by the monopolist is unique and has no substitute goods, it is impossible to enter the market under a number of circumstances, as a result of which the producer retains all power in its hands. In addition, the monopolist can significantly influence pricing, but in this case his power is still limited.

Receiving profits in this market is very high. That's why more and more outsiders are involved in the industry, but how do monopolists fight such frenzied competition? How do they manage to restrain this onslaught and continue to dominate? To do this, consider the types of monopolies :

1. Natural. It arises mainly in industries that provide the society with vital resources, such as electricity, water, gas, transportation (for example, urban transport), etc.

In this case, it is cheaper to supply the market with the necessary resources, so production becomes more efficient.

There is a register of natural monopolies, in which a single information on the involved economic entities is collected.

2. Monopoly in conditions of control of the organization over rare natural resources or knowledge. If the firm has special resources (oil, for example) or knowledge (patents), then it can dominate the market due to the fact that it is their sole owner.

3. State monopoly is the situation in the market, which is conditioned by a natural monopoly (for example, rail transportation). Also this circumstance, obtained due to the fact that in some industry the inflow of other organizations of a non-state type is prohibited (for example, in the sphere of export and import).

4. A bilateral monopoly is a situation in the marketplace where the monopsist buyer opposes the monopoly producer (for example, when the monopolist provides a service to the state-the only buyer of this type of service).

There is such a thing as monopolistic competition. It is a kind of market structure in which a significant number of sellers or manufacturers deliver to the market a similar, but not quite the same product, which is different in quality, design or any other characteristics. Goods that are produced in conditions of monopolistic competition, constitute one industry and one market (for example, toothpaste, sportswear, non-alcoholic products).

Thus, a monopoly is a state in which power belongs to one seller or producer. But in the presence of many buyers, this situation on the market is deplorable. Often, the monopolist reduces output and raises prices for goods.