Answer to Question #286247 in Microeconomics for Omosh

Question

What is the main causes of monopoly power of producers in an economy

Answer 1

• Small market- during the initiation of a small market the initial entrant is establishing a monopoly position due to lack of competition. At this stage of the new market is usually easy to establish a monopoly.
• Import restrictions- if competition for cheap foreign market is unable to enter the market, they will be less pressure exerted on domestic companies.
• Geographic markets in terms of having a sole shop within a local market that one has to travel for long distance to get services in that particular shop.
• Key source ownership in which monopolies arise when one business owns a key source for instance in the UK, The National Grid is a monopoly since it has ownership of a key source.