Conditions To Entry Of Other Firms Economics Essay

Introduction to Monopoly

Monopoly can be defined as a signifier of market construction where there is a individual marketer bring forthing a trade good that has no close replacements. There is no difference between house and industry and monopoly signifier as imperfect market. Furthermore, monopoly is the exclusive supplier of goods and services.

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Definition of Monopoly

Monopoly can be defined as a market construction where a marketer and larger figure of purchasers are selling the merchandises which have no close permutation and have a really high entry and issue barrier. There are many illustrations of monopoly merchandises such as overseas telegram telecasting, telephone services and many more.


One marketer and larger figure of purchasers

In this state of affairs when there is one marketer the monopoly will be. Monopoly is a market where the monopoly house operates. Firm and industry are the same in monopoly because it merely involves one marketer. A monetary value market is a house which has the duty to manage and command the monetary value.

Restriction of the entry of new houses

To come in a monopoly market is non easy manner because there are rigorous barriers to come in the new house. There is a natural or legal limitation to come in the new houses into the industry. The monopolizer does non faces any competition because barriers of entry.


In this state of affairs merchandises which are sold can be advertise in monopoly market. For illustration merchandises such as luxury autos need more advertisement to inform the consumers on the goods. Examples such as H2O, electricity and house telephone services does non necessitate any advertizement because the consumer knows where to acquire the merchandises.

Monetary value Maker of a Merchandise

In this state of affairs the monetary value the merchandises are decided by one marketer merely at all times. The Sellerss in the monopoly have the full duty and power of monopoly to command the degree of the monetary value of a big measure of end products.

Diagram of Monopoly

Monopoly involves two type of diagram. In the first diagram involve demand ; fringy gross, and snap, meanwhile the 2nd diagram involve maximization.


In the diagram above shows the demand, fringy gross ( MR ) , and snap of the monopoly. The demand curve move downward and its show that the monetary value for every unit of end product sold. MR is an extra in entire gross ( TR ) from selling one more unit of merchandise, while TR is the monetary values multiply with measures. MR curve is besides slope downwards and it lies below the demand curve. The MR is less than monetary value because lower monetary value would do an addition in TR.

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In the diagram, demand curve is elastic as there many houses. This is happen because there is deficiency of close replacements. The net incomes shown as unnatural where the shaded country and rival the short tally.

As shown in the graph above, a monopolizer confronting demand curve D0 will bring forth measure Q0 and the monetary value charged will be equal to P0.

2.1.3 Decision

In this inquiry I had learn more in inside informations about monopoly and it & amp ; acirc ; ˆ™s characteristic. I had learn how to make the diagram of the monopoly. Monopoly involves two type of diagram. In the first diagram involve demand ; fringy gross, and snap, meanwhile the 2nd diagram involve maximization.

3.0 Perfect Competition, Monopolistic Competition, and Oligopoly

Perfect competition can be defined as a market construction which has big figure of purchaser and Sellerss. In the competition, the Sellerss produce and sell merchandises that are homogenous and the entry of other houses are easy and no limitation. Meanwhile in the monopolistic competition, the merchandise which is sold by the Sellerss will be many differences but there will be a close permutation between each other. To come in the monopolistic competition there is a no barriers of entry of other industries and it is simple. Furthermore oligopoly can be defined as a market construction that has a few Numberss of houses merely. In this state of affairs few houses are offering and selling a big measure of merchandises that are homogenous or different and the entry of other companies are purely prevented.

3.1 Difference between the Features of Perfect Competition, Monopolistic Competition, Oligopoly, and Monopoly

There are 4 types of competition as I have written above. All of these monopolistic competition, oligopoly, and monopoly have their ain maps but the features of these four types of markets are non the same. The following are the difference between the characteristics and features of this competition in the market.

3.1.1 Number of Firms and Sellers

Perfect competition and monopolistic competition, both figure of houses and Sellerss are big. Meanwhile in the oligopoly there is merely a few Numberss of houses and Sellerss. In the monopoly there is merely one house and individual marketer merely. For illustration, toothpaste industry such as Colgate and Darlie, are the illustrations of monopolistic competition. Agricultural such as veggies and fruits is the illustration of perfect competition. Petrol station is the illustration of oligopoly, whereas overseas telegram companies and Telekom Malaysia are the illustrations of monopoly.

3.1.2 Types of Merchandises

The merchandises which are sold in the perfect competition will be standardized. In the monopolistic competition the end products that are produced are different. Furthermore, in the oligopoly, the merchandises which are provided are homogenous or differentiated, but the end product that is offered in the monopoly are alone and no close permutation. Agribusiness such as veggies and fruits are the illustrations of merchandises in the perfect competition, cocoas are the illustrations of end products in the monopolistic competition, cars, are the illustrations of merchandises in the oligopoly, and in conclusion electricity, H2O are the illustrations of end products in the monopoly.

3.1.3 Conditionss to Entry of Other Firms

To come in the entry of other houses is easy in the perfect competition and monopolistic competition because there are barriers of entry of other industries in the oligopoly. To come in the other company is non easy and possible for the monopoly. Perfect competition is the house to those who wish to open a lily-livered farm can run the concern if the house has the necessary factors of production such as land, labour, and capital as the bing houses. In the monopolistic competition, if the house wishes to fall in into shampoo industry, so the house must happen some difference in term of quality, odor, form, and labeling in order to be in monopolistic competition.

3.1.4 Control over Price of the Merchandises

Perfect competition and monopolistic competition Sellerss are monetary value taker and does non command the monetary value merchandises. Oligopoly is really free and does non command their merchandises. Meanwhile in the monopoly the individual individual or marketer control the monetary value of the merchandises. In the perfect competition, there is no advertizement in the telecasting about fruits or veggies particularly without any trade name. In the oligopoly, if a Toyota auto alteration its map or monetary value so other others auto such as Nissan, Audi will besides alter their design and monetary value.

3.1.5 Decision


Perfect Competition

Monopolistic Competition



Number of houses

A batch




Type of Merchandise



Homogeneous / Differentiated

Merely merchandise of its sort

( no near replacement )


Very easy

Relatively easy

Not Easy


Monetary value Puting


( Price taker )




( Price Maker )

Non Price Competition



Considerable for a differentiated oligopoly


Productive efficiency

Highly efficient

Less Efficient

Less Efficient


Long net incomes






Does n’t Exist ; agribusiness stopping point

Fast Food, retails shops, cosmetics

Cars, Steel, soft drinks, cereals

Small town newspaper, rural gas station


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