Answer to Question #107490 in Microeconomics for ishini nimasha

Question

How monopoly markets end with Introduction of competition ?

Answer 1

Monopoly exists when there is only a single person or an enterprise that can supply a particular product in a market. In such a case, the seller has control of the market and he can manipulate various things to favor his position such;

• Making price of commodity
• Implementing strategies that barrier other suppliers from entering the market

However, the introduction of competition i.e entry of other suppliers into the market, makes the initial single supplier loose control of the market because buyers have varieties of sellers to choose from.

The effect of competition will be increase of supply of a commodity leading to low prices and stabilization of price. This in turn ends the monopoly market.