Characteristic Of Monopoly Market Economics Essay

What is the market? Market is a topographic point and Sellerss come face to face with purchasers in that topographic point. But communicating and transit revolution alterations it from a topographic point Today ‘s engineering makes it an ”environmental. ” Seller or purchasers can provide or demand any goods with phone, facsimile or cyberspace. The market lost its concrete form.

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The market ‘s position and quality are really of import for the execution to full competition regulations. The construct and definition of the market is of import for that topic.

Some economic experts divide to the market into two parts. These are ; absolutely competitory market and amiss competitory market. I will explicate to monopoly market type and oligopoly market type of amiss competitory market and I will touch upon some characteristics of absolutely competitory market for understand differences.

Monopoly MARKETS

One of the types of imperfect competition is monopoly markets. It is a sort of market which is far from perfect competition market. There is merely one producer/seller for a merchandise so the individual concern is the industry. Difficult to come in such a market and requires high cost. There are economic, societal and political boundaries of these markets. For illustration, if a authorities wants to command, such as electricity, it can be make a monopoly over that industry.

Monopoly market gives to its proprietors some particular rights and privileges for an plus or a natural resource. For illustration, in Saudi Arabia, the authorities has sole control over the oil industry. There is no fright of marketer from any competing houses. Because of there is non another company that produces same goods or supply of same goods. Therefore monopoly houses move in independency about sale monetary value.

CHARACTERISTIC OF MONOPOLY MARKET

The most of import factor in the formation of monopolistic market is the supply of goods that can non be easy substituted. & A ; deg ; f there is permutation of goods in that market, monopolistic house ‘s effectivity will be reduced and it ‘s independency will be limited about monetary value finding. For illustration a monopoly house can non find high monetary value for selling monetary values of lignite coal. Because of there are other types of coal and electrical energy in the market. That house should take into history to indirect competition. The 2nd factor the monopolistic house has to believe buying power of purchasers. Because of if the house determines higher selling monetary value, it may non happen any purchaser.

I want to give illustration about monopoly of Turkey. Licorice root receiving system is merely monopoly disposal in Turkey and it is called ” purchaser monopoly ” . There is merely one marketer in Meleagris gallopavo about sodium carbonate and nutrient acids and it is called ” marketer monopoly ” .

Four beginnings of monopoly power ;

Natural monopoly

If a concern has natural resources, it will supply to possibility a monopoly for concern. For illustration a hotel can derive monopoly power with a good beach and a perfect landscape. Some states have natural monopolies which on the mines or agricultural merchandises at the international degree. Coffee, Ananas comosus, oil, Cr are natural monopoly merchandises in some states.

Legal monopolies ;

Legal monopolies divided into two ; private monopoly and a public monopoly. Examples of legal monopoly in Meleagris gallopavo ; raki and some liquors, rail conveyance, station office services, wireless and Television services. These based on privileges given by jurisprudence. Private endeavor can has legal monopolies. Patent rights are a signifier of legal monopoly. Patent give to a right to utilize for a individual who invented a new belongings. Patent rights are protected by jurisprudence and there are besides international understandings on this topic.

Contract monopolies ;

Several large companies make a trade for eliminate to competition between them. This Corporate monopoly normally develops in Germany. Cartels consist for remove to competition on monetary value and gross revenues conditions. Trusts develop at USA ; Cartels undertaking to legal being, There is non legal presence for the members of trust. For illustration ; all aircraft winging to organize a trust outside the socialist states, Aircraft Company will have the same pay but each aircraft company is dependent.

existent monopolies ;

Firms can take advantage of an existent state of affairs. For illustration, if the house is the first company on arm of a concern, it can be a power in that market for a long clip.

OL & A ; deg ; GOPOLY MARKET

There are merely a few houses that make up an industry in an oligopoly market. It is a market type which has a little figure of Sellerss and a batch of purchasers. This choice group of houses has control over the monetary value like a monopoly. Oligopoly market has by and large three, five or eight elephantine companies and their powers are equal to each other. There are a few elephantine companies in that market about of import points. For illustration, Cu, aluminium, ferric metals-steel, cars, tractors, trucks, car tyres, petro-chemical and heavy industries have merely three or five elephantine houses in their ain markets.

There are two Sellerss and a batch of purchasers in the market for a good, the name of market are duopoly market.

In oligopoly markets, figure of sellers is non less than monopoly markets for illustration the cost routing of power weaker than monopoly markets. But this figure is non excessively much ; each one can impact the monetary value degree.

The company ‘s backdown from the market is of import event in oligopoly market. It caused to lift monetary values. It affects to the entire supply. The other manus is if a new house enters the market, monetary values will fall and other houses will be disturbed from that issue.

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There are a little figure of houses in oligopoly market so a house affects to other houses about some topics. These topics are production measure, the quality of the goods, attempt to increase about sum of gross revenues, monetary value policy. Each company has to follow other house ‘s place. It likes chancing participant. Some economic experts explain to oligopoly theory with game theory. The houses want to protect the certain monetary value degree and maintain monetary value in oligopoly markets. There is a secret understanding among the houses about monetary value.

Types of oligopoly market ;

Homogeneous oligopoly: If the goods of all the companies is similar nature in that market, it will be called ”homogenous oligopoly ” . For illustration cement, steel and aluminium industries. Degrees of committedness to each other are really high in homogeneous oligopoly. A±f a house lower monetary value, it effects to rival house ‘s gross revenues

Differentiated oligopoly: If the goods of companies is different from each other in that market, it will be called ”differentiated oligopoly ” . For illustration, cars, machinery and edifice stuffs. Price alterations create less impact on rivals. In short, if the grade of distinction additions, mutuality between houses will be reduced

Full oligopoly ; oligopolistic houses create a group and they try to maximise their net incomes. Dependence between houses is really strong

Partial oligopoly: That type of oligopoly is opposite to full oligopoly and dependance between houses is weak so companies do n’t make a group.

PERFECTLY COMPETITIVE MARKET

Absolutely competitory market characters ;

The purchasers and Sellerss can non act upon to monetary value entirely in that market. In other words houses can non use to independent monetary value policy under the perfect competition. Price is apparent and companies have to accept it. This is shown with horizontal monetary value line.

The conditions of perfect competition market are as follow ;

There are a batch of Sellerss in that market who produce the same goods and there are a batch of purchasers in that market who want to purchase the same goods.

If a house increases or decreases to its sum of gross revenues, the monetary value of goods wo n’t alter excessively much. Because of there are many sellers in that market.In the other words, each company must accept as the market monetary value.

The same state of affairs applies to the purchasers. There are many purchasers in that market. The sum of the purchase determinations of purchasers do n’t act upon to the monetary value of the goods excessively much. That state of affairs is called ” the premise atomistic ” .

The purchasers and Sellerss easy enter to market and they can easy acquire out of the market. If the houses want, they can travel to another industry or other concern.

Produced or sold goods are homogenous in absolutely competitory market. In the other words, there no difference between the same sort of goods about quality and characteristics.

Both purchasers and Sellerss have full cognition of the market. This is called ”openness premise ” .

COMPARISON OF PERFECT COMPETITION MARKET AND MONOPOLY MARKET

In perfect competition market, houses make gross revenues with lower monetary values than monopoly market. Because of the monopoly market ‘s equilibrium monetary value is higher degree for long-run.

In perfect competition market, houses make to more low-priced production but monopoly market ‘s production cost is higher than perfect competition.

The sum of production of perfect competition houses is more than monopolistic houses so their production is more and cheaper than monopoly market.

Idle capacity can be a large job for monopolistic houses. There is extravagancy of production resources in footings of society.

Monopolistic companies ‘ net incomes are inordinate. It caused to inequalities in income distribution. It is n’t comport with ” societal justness ” rule.

Perfect competition ‘s demand curve is to the full flexible, in other words it is horizontal monetary value line. But monopoly market ‘s demand remedy is same negatively aslant market demand curve.

If the fringy cost is equal to monetary value, perfect competition market will be equilibrium on that point. But it is different for monopoly market. If fringy gross is equal to the fringy cost, it will be equilibrium on that point.

AN EXAMPLE ABOUT OL & A ; deg ; GOPOLY MARKET OF TURKEY

Information and communicating sectors are developing recently in Turkey and it has exceeded to the bounds of the state. That sector was more affected by the technological developments. More than ten old ages ago public groups have the telecommunications companies. That is called ” monopoly ” . However, today this company is n’t merely repair telephone service.

Mobile and nomadic phone, cyberspace, overseas telegram Television, electronic commercialism effects to it ‘s construction. All states change their sectors and companies with that new economic system.

Changes in the Telecommunications sectors ;

Old ages 1980s ; protected monopolies, stable demand, weak competition

Old ages 1990s ; dynamic construction, retail services, regional competition

Old ages 2000s ; competitory construction, international competition, these times are information age and nomadic communicating, supply to added-value services ( for illustration cyberspace )

LIBERALIZATION, LEGAL AND ADMINISTRATIVE ARRANGEMENTS & A ; deg ; N TELECOMMUNICATIONS MARKET OF TURKEY

Telecommunication sector creates the basic substructure of information society. This sector has economic and commercial value which is a strategic sector. That sector was under province monopoly in quaint. But technological, economic and societal developments at the planetary degree affected that construction. New telecommunication order marks to give that service in competitory environment.

Before 1990s, there was a monopoly market construction in telecommunication industry. Turkish Telecom Company had that sector with legal monopoly. In July of 1993, Turkish telecom and Turk cell, Telsim companies signed mobile phone system contract for portion grosss. Both of the companies paid 500 million U.S. dollars for licence fee. Turkish telecom had 67.1 per centum of income in that sector, Turk cell and Telsim had 32.9 per centum of income in that sector with that understanding. After Aria company entered the market. Turkish Telekom was privatized and Aycell Company of Turkish Telekom entered this competition. After a period of clip, Aria and Aycell companies decided to unify and they created to ”Avea ” . Telsim was sold to a new company and it has a new name that is ”Vodafone ” .

Market and competition conditions of GSM operators in Turkey are oligopolistic market policies. There are 3 large companies in that sector. These are ; Turk cell, Telsim and Vodafone. If one of them has a new monetary value policy, it will be effects to the other companies. In this instance, other houses can make up one’s mind to take down monetary value, they can do some advertisement and gross revenues companies or publicity run. This sector in Turkey has all the characteristics of the oligopoly market.

Decision

Conditionss of imperfect competition are an obstruction in forepart of the development. The market monetary value is in the custodies of a individual in the monopoly market. A few people portion to the market in oligopoly market.

There are many purchasers and Sellerss in perfect competition environment. Monetary value does n’t belong to a peculiar group. The competition provides to better of states. Turkey is working for provide to absolutely competitory market conditions in its all sector.

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