Thursday, December 9, 2010

Four Varieties of Monopoly

The 4 Varieties of Monopoly

Geographical- For example, if there is only one small shop in a low populated area, then this business has a monopoly over the small amount of people in the area.  They can set their own prices as they please because of no other competing businesses.  It would not be financially efficient for a new business to open up.  So, the small shop has all the power making it a monopoly.  

Technological-  For example, if a business finds a cure for cancer, then the business has complete monopoly over that cure and product, therefore creating a monopoly of that product.

Natural- For example, if you had multiply businesses trying to offer a sewer service, then this would require multiply sewer lines going to the same home which is impractical and implausable.  Therefore, making the sewer business a natural monopoly.

Governmental- For example, if the government owned and dictated all the water supply, then this prevents other businesses from competing with the government creating a monopoly.

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