Differences Between Monopoly And Monopoly

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A Monopoly can be described as a market situation where one producer (or a group of producers acting in concert) controls supply of a good or service, and where the entry of new producers is prevented or highly restricted. Monopolist firms (in their attempt to maximize profits) keep the price high and restrict the output, and show little or no responsiveness to the needs of their customers. Most governments therefore try to control monopolies by adopting the following ways: 1. imposing price controls 2. taking over their ownership (called 'nationalization') 3. by breaking them up into two or more competing firms. Monopolistic competition on the other hand is a market situation midway between the extremes of perfect competition and monopoly,…show more content…
The point of equilibrium in both monopoly and monopolistic competition is at the equality of MC and MR and the MC curve cuts the MR curve from below. 2. In both, the demand curve (AR) slopes downward to the right and the corresponding marginal revenue curve is below it. 3. The equilibrium point is below the price line (AR) in both the…show more content…
There is no difference between firm and industry under monopoly. The monopoly firm is the industry. On the contrary, there are many firms in monopolistic competition and the industry is called a group. 3. Only a single product is produced under monopoly and there is no product differentiation. Under monopolistic competition every producer produces differentiated products. Products are similar but not identical. They are close substitutes rather than perfect substitutes. They differ from one an¬other in design, colour, flavour, packing etc. As a result, there is product differentiation. 4. There are no selling costs in monopoly because the monopolist has no competitor. However, when the monopoly firm is established, the monopolist may spend some money on advertisement to acquaint the consumers about his product. But he will spend on advertisement only once. On the other hand, due to large number of firms and existence of competition among them, expenditure on selling costs is essential under monopolistic competition. 5. The monopolist can charge different prices from different customers for the same product and can adopt the policy of price discrimination. But price discrimination is not possible under monopo¬listic competition due to the presence of ‘competitive’ element in

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