Perfect competition

Imperfect Markets

• Monopoly is an industry composed of only one firm that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry.

Pure Monopoly

• A pure monopoly is an industry with a single firm that produces a product for which there are no close substitutes and in which significant barriers to entry prevent other firms from entering the industry to compete for profits.

Barriers to Entry

• Things that prevent new firms from entering and competing in imperfectly competitive industries include:

• Government franchises, or firms that become monopolies by virtue of a government directive.
• Ex : Television stations, Cable TV Company

Barriers to Entry

• Things that prevent new firms from entering and competing in imperfectly competitive industries include:

• Patents or barriers that grant the exclusive use of the patented product or process to the inventor.
• Example: IBM has the exclusive right to produce its patented computers, Basmati rice production in India etc.