How to create Monopoly in the Market?

How to create Monopoly in the Market?
How to Create a Monopoly in the Market.

It is not simple to create a monopoly in the market. A business organization needs to break old rules and create new strength by adopting a monopolistic success formula. The monopolistic market actually drives you toward arrogate the complete market share. A business should be unique and powerful that no one can enter into it.

If you want to create a monopoly in the market then create an entry barrier no one can enter into this business.

"Not to remain the competition, But to become a monopoly"

Monopoly:

It is the formation of the market in which there is a single seller of a product with no close substitutes.  for Instance: Railway in India is a monopoly industry of the government of India.  Since there is only one producer of a product on the market.

why monopoly is important?

There are many reasons why it is important.

1. One Seller and a Large Number of Buyers.

Under Monopoly, there is a single producer of items. He may be alone, or there may be a group of partners or a joint-stock company or a state full stop however there is a large number of buyers of the product.

2. Restrictions on the Entry of New Firms.

under Monopoly, there are some restrictions on the entry of new companies into the Monopoly industry. generally, there are patent rights granted to the Monopoly company.  Or a Monopoly company has exclusive control over a technique (of production) or over the raw material needed for production.


3. Full Control Over Price.

A single seller of the product, a monopolist has full control over its price. a monopolist is a price maker. he can fix whatever price he wishes to fix for this product.

4. Price Discrimination.

A monopolist may charge different prices from different buyers. it is called price discrimination. price discrimination refers to the practice of charge at a different price from different buyers for the same good.

How does a Monopoly Market Grow?

1. Government Control.

The government may grant a license for the production of a particular item only to one producer.  A Monopoly comes into existence. the government may decide to control the production of certain goods or services exclusive through its departmental undertakings like railway in India.

2. Patent Rights.

New product patent rights. it amounts to monopoly rights regarding the shape design or other features of the product. patent rights may be secured on new technology. it stops the use of patented technology by others. A monopoly market structure emerges.

3. Gift of Nature.

A monopoly may emerge as a gift of nature. The only spring of water is an island, for instance, maybe under the control of one person.

Monopolistic Competition.


It is the form of the market in which there are many buyers and sellers of the product but the product of each seller is different from that of the Other.  There are many sellers selling a differentiated product. Product differentiation is generally promoted through Trademark or brand name for example firms producing different brands of toothpaste-like, Colgate, closeup, Pepsodent, etc.

 The monopolistic competition includes the feature of monopoly and perfect competition. The trademark of the brand name gives some Monopoly power to the firm. Different firms of one charge different prices of their product. In other words, each firm control over price. on the other hand, since many firms producing a commodity like toothpaste, there is competition in the market. No firms are able to exercise full control over the price of the product. we can say that at a firm under monopolistic competition exercises only partial control over price.

Features of Monopolistic Competition.

1. A large number of Buyers and Sellers.

As under perfect competition, there is a large number of buyers and sellers. The size of each firm is a small firm that has a limited share of the market.

2. Perfect Knowledge.

Sellers and buyers of the product as well as the owner of the motive of production.  Perfect knowledge about the market. Because of product partiallity, it is not even possible to have perfect knowledge about a variety of brands in the market.  This leads to consumer's exploitation by way of higher prices for low-quality products.

3. Freedom of Entry & Exit.

Companies are free to enter the industry or leave it. However, new firms have no complete freedom of entry into the industry. The product of some firms may be legally patented. New firms cannot produce equal products. For example, No competitor firm can produce/sell a patented item like a woodland brand of shoes.

4. Non-price Competition.

Non-price competition is another important competition feature of monopolistic competition. The firm often avoids getting into price-war. Instead, they focus on non-pricing competition.

5. Selling costs.

Product differentiation is often supported by heavy advertisement. It leads to selling costs. These costs are incurred by a company to increase its market share. Because of advertisements, buyers develop brand loyalty. Once a brand loyalty is established, the firm enjoys higher and higher control over price

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