The monopolist economy

Pages: 4 (940 mots) Publié le: 19 mai 2010
The Monopoly: A State of Exclusivity.
A monopoly is a situation of exclusivity, in economics it is when an individual, a corporation or government is the sole holder of the supply and demand on aparticular market (either for manufacturing goods, sales and operating services). In a market of perfect competition, there should have atomicity (many buyers and sellers to promote competition). But inreality, this is not the case, we find that in many markets, there are: few producers: oligopoly (mobile, automotive, petroleum, supermarket ...)
A single producer: monopoly (the Post Office,public railways...).
The monopoly is rare, it exists mainly in the public domain, they are public companies that manage them. However, because of the increasing concentration of businesses, it is moreoligopolistic (horizontal concentration. Here, companies buy or merge with a company of the branch, such that Neuf Telecom in France buys Club Internet).
A monopoly may appear for several differentreasons and sometimes it can be caused naturally this is what we call a “natural monopoly”.
It occurs when an industry requires significant investment if one company can make profits. You have toproduce in large quantities to repay investments (economies of scale) and therefore two companies could not survive.
This is the case in rail transport (construction and management of railway lines),production of energy (nuclear, thermal ...) for example. This forms a natural monopoly. These monopolies are usually managed by public companies because, given the vital nature of these activities,all citizens must be able to access at a reasonable cost. A private company might be tempted to take advantage of the situation to make excessive profits (as is the case in oil or water distribution inEgypt).
In some industries, there are barriers to entry, for example through research and development costs exorbitant (computer chips, aircraft ...). So few companies share the market.
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