Discriminating monopoly

 A market can be defined as a group of firms willing and able to sell a similar product or service to the same potential buyers.
 Imperfect competition covers all situations where there is neither pure competition nor pure monopoly.
 Perfect competition and pure monopoly are very unlikely to be found in the real world.
 In the real world, it is the imperfect competition lying between perfect competition and pure monopoly.
 The fundamental distinguishing characteristic of imperfect competition is that average revenue curve slopes downwards throughout its length, but it slopes downwards at different rates in different categories of imperfect competition.
 Monopoly refers to the market situation where there is a
 Single seller selling a product which has no close substitutes.
 Monopolies are characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the existence of a high monopoly price well above the firm's marginal cost that leads to a high monopoly profit
 The word “oligopoly” comes from the Greek “oligos” meaning "little or small” and “polein” meaning “to sell.” When “oligos” is used in the plural, it means “few” ,few firms or few sellers.
 DEFINATION:
 Oligopoly is that form of market where there are few firms and there is natural interdependence among the firms regarding price and output policy.

1. Discriminating Monopoly 1

2. Monopoly Monopolies are characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the existence of a high monopoly price well above the firm's marginal cost that leads to a high monopoly profit 2

3. DEFINITION OF 'DISCRIMINATING MONOPOLY' A single entity that charges different prices, which are not associated with the cost to provide the product or service, for its products or services for different consumers. A discriminating monopoly, by using its monopolistic position, can do this as long as there are differences in price elasticity of demand between consumers or markets, and barriers to prevent consumers from making an arbitrage profit by selling among themselves. By catering to each type of customer the monopoly makes more profit. 3

4. An example is an airline monopoly. Airlines frequently sell various seats at various prices based on demand. When a new flight is scheduled, airlines tend to lower the price of tickets to raise demand. After enough tickets are sold, ticket prices increase and the airline tries to fill the remainder of the flight at the higher price. Finally, when the date of the flight gets closer, the airline will once again decrease the price of the tickets to fill the remaining seats. From a cost perspective, the breakeven point of the flight is unchanged and the airline changes the price of the flight to increase and maximize profits. 4