Posted: April 12th, 2016
Tools to sanction monopolies can be from patents, trademarks, copyrights etc. Sometimes due to the sensitivities attached to an industry, the government may enter the business by itself and create a state-monopoly.
Barriers to entry are insurmountable. These can be brought about by economies of scale, where companies are able to produce more goods at progressively cheaper prices, capital requirements (as with a large factory),
technological superiority etc. There may also be no close substitutes for the product. Control over natural resources and network externalities are additional reasons for creating and sustaining a monopoly.
Profits are set to be maximized, and the price maker has control over the price of goods or service. The company becomes the industry; depending upon the elasticity of the market, there may be more sales for less price and vice versa.
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