Monopolistic market

The monopolistic economy

The monopolistic economy is one in which there is only one primary producer. Items found in a monopolistic market are those that are important to the consumers. It is not easy to start such a business and there are different types of monopolies that occur before joining such a market, such as closed monopolies. It is easier to collect information about a good or service because government departments in charge of industry and commerce may be contacted. Any goods are sold in the market, and the vendor may charge various prices to different customers. An example is a product that the buyer cannot sell quickly, or in some cases, it is impossible to sell. The seller can have different prices for different consumers by assessing the elasticity of demand for the product that each customer has.

Impact on petrol station business

If I owned a petrol station and my next competitor decides to lower the prices of petroleum products, I would not lower my price because there are individual who are willing to buy the product at a cost that is more than the marginal cost but not from a monopolist. Hence, I would retain the already existing clients and also attract new customers thus creating more business. If my competitor were my friend, I would not change the price because business is about profit and not friendship. An example of an industry dominated by 2-3 firms is the mobile phone manufacturing industry. The products are unique as per the brand. Starting a business in such an industry is not easy because of the open monopoly where one firm controls more than 50% of the market and others share the remaining percentage.