Monopoly

A monopoly exists when a single firm dominates a market, possessing sufficient market power to act as a price maker rather than a price taker. In UK competition law, a firm is considered to hold a monopoly position if it has 25% or more of the market share — though in economic theory, a pure monopoly means a single seller supplying 100% of the market. This lesson examines the sources of monopoly power, the behaviour of a monopolist, and the welfare implications.

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Sources of Monopoly Power: Barriers to Entry

A monopolist can maintain its dominant position only if there are barriers to entry — obstacles that prevent or discourage new firms from entering the market.