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There are two types of monopolies: coercive and non-coercive.
Coercive monopolies use coercion (physical force, threats of force or fraud), via private or government means, to eliminate their competition. Thus they have less competitive incentive to provide higher quality at lower cost. Therefore they tend to be relatively inefficient compared to freely competing businesses.
On the other hand, a non-coercive monopoly does not use coercion to eliminate competition. It is a freely competing business. In other words, competing service providers are free to enter the market. This possibility provides competitive incentive for the non-coercive monopoly to maintain customer loyalty by providing them with high quality at low cost. If the non-coercive monopoly does not serve consumers as well as it could, they create profit incentive for competitors to enter the market and win those customers. To prevent this from happening, non-coercive monopolies tend to be relatively efficient compared to coercive monopolies and potential competitors.
In fact when multiple businesses merge into one, they often achieve higher economies of scale. Thus non-coercive monopolies have the potential to be more efficient than multiple competitors.
Keep in mind, most monopolies today are coercive monopolies, and thus relatively inefficient.
What else can I help you with?
Is Monopoly Efficient?
Monopoly is efficient because it promotes growth in market sectors by engaging products in a competitive environment. That's what a monopoly does NOT do. A monopoly (single supplier to a marketplace) can be either efficient or inefficient. An efficient monopoly is one where, free from competitive pressures, the supplier spends all its time making more, higher quality and better costing products. That's not what usually happens. An INefficient monopoly is one where the monopolist gets fat and happy, secure in his knowledge anyone who uses the product he sells has to get it from him, and curtails innovation (since everyone's buying the stuff anyway, why bother?), cheapens the product he's selling and raises the price beyond all justification.
What board game did you have to find the most efficient shopping route?
Monopoly of course.. LIKE DUHHH
Can a monopoly produce efficient output level?
A monopoly typically does not produce an efficient output level because it restricts production to maximize profits, leading to higher prices and reduced consumer surplus. Unlike competitive markets, where supply meets demand at a socially optimal point, monopolies create a deadweight loss by producing less than the quantity that would be socially efficient. Consequently, while a monopoly can achieve profit maximization, it often does so at the expense of overall economic efficiency.
How did the Bessemer process contribute to the development of Carnegies monopoly?
The purchase enabled Carnegie to discover a more efficient production method
What is an natural monopoly?
A natural monopoly exists when a single firm can supply a good or service to an entire market at a lower price than could two or more firms. Generally it arises when there are economies of scale over the relevant range of output.
How did the Carnegie's purchase of Allegheny Steel contribute to the formation of his monopoly?
The purchase enabled Carnegie to discover a more efficient production method
How can I speed up the game of Monopoly to make it more efficient and faster to play?
To speed up the game of Monopoly, you can set a time limit for each player's turn, limit negotiations, and use house rules like starting with more money or fewer properties. These adjustments can make the game more efficient and faster to play.
How does a monopoly impact the economy as a whole?
A monopoly can impact the economy by reducing competition, leading to higher prices for consumers, lower quality products, and less innovation. This can result in a less efficient allocation of resources and hinder overall economic growth.
Why monopoly is inefficient and perfect competition efficient?
It is assumed that they are producing on the lowest point of their Average Total Cost curves, therefore producing the maximum possible output from available inputs and so productively efficient. They are also allocatively efficient because Price is equal to Marginal Cost.
What is the third main source of a monopoly's barrier to entry?
The cost of production makes a single producer more efficient than a large number of producers.
How many types of monopoly exist in the market?
There are four main types of monopoly in the market: natural monopoly, geographic monopoly, technological monopoly, and government monopoly.
What is the impact of a monopoly on deadweight loss in a market?
A monopoly can lead to deadweight loss in a market because it restricts competition, allowing the monopolist to set higher prices and produce less than the efficient level of output. This results in a loss of consumer surplus and overall economic welfare.
