Pure monopoly

A pure monopoly is a market organization in which there is no competition at all. If you turn to the definition of pure monopoly, you can find out that with such a market organization, a single seller of the goods is possible, analogs or substitutes that are not available in other industries. A pure monopoly is a vivid example of imperfect competition .

Firm in conditions of pure monopoly

In conditions of pure monopoly, a firm can stay only if the product it produces is unique, and it does not even have close substitutes.

Among examples of enterprises of pure monopoly, you can list all kinds of utilities companies, without the services of which any firm can not do. Despite the fact that in the modern world there is a struggle with monopolistic enterprises, in some cases their existence is justified by necessity. For example, in villages and villages monopolists may well be suppliers of agricultural machinery or repair companies.

Signs of pure monopoly

Net monopoly has its own specific characteristics, which are difficult to confuse with other phenomena from the economic sphere. The main features include:

Of course, having such power, a monopoly company is able to set its prices and regulate such images with a proposal. Often, such firms knowingly overstate the price of the product, which is why they receive very high profits. For a monopolist, it makes no sense to be guided in these matters by anything other than considerations of personal gain. Due to the fact that consumers do not have a choice, they still have to purchase the goods - or refuse to use it at all. That is why the monopolist never invests in advertising - his product is simply not needed.

It should be noted that a pure monopoly and pure competition (arises when there are many producers of one commodity) have a complex connection: if suddenly another company tries to enter the market with the same product, the competition will be very difficult. Here, the need to obtain patents, licenses and, quite often, to overcome unfair competition is affected.

Types of pure monopoly

Despite the fact that experts and experts from the field of economics oppose monopolies, they are still present in modern society. There are several types of such enterprises:

  1. Natural monopolies are monopolies, which appear naturally due to a combination of a number of operating factors (for example, Beltransgaz or RZD).
  2. Monopolies based on the extraction of unique minerals (for example, the company "Norilsk Nickel").
  3. Monopolies controlled and regulated by the state. This type includes all electricity and heat supply networks.
  4. Open monopolies are monopolies that arise in connection with the release of absolutely new products (as in the past, Apple, which proposed the technology of touch).
  5. Closed monopolies - monopolies that arise in the case when the state prohibits a number of companies some kind of activity, which allows others (as an example, a military-industrial complex).
  6. Geographical monopolies are monopolies that arise in remotely located settlements.
  7. Technological monopolies are monopolies that arise due to the peculiarities of technology (such as home phones at the time).

A pure monopoly, if you look closely, is not such a rare thing in the modern world. It is not in every industry that competition is possible.