Monopoly Market Regulation

Páginas: 10 (2489 palabras) Publicado: 7 de mayo de 2012
MONOPOLY
MARKET
REGULATION.
MONOPOLY
MARKET
REGULATION.

02/12/2011 Guillermo Sanchez Tobaruela.
1.- INTRODUCTION.
The monopoly is a situation in a market sector in which a single seller or buyer supply the good or service who demand required to meet their needs in this sector. For an effective need not exist anyalternative or substitute product for the good or service offered by the monopolist, and should not be the slightest threat of entry of another competitor in that market. This allows the monopoly control of the prices.
To exercise monopoly power have to give a series of conditions:
1. - Controlling an indispensable resource for the product.
2. – Have a specific technology that enables the companyto produce, at reasonable prices, the entire amount needed to supply the market, this monopoly is sometimes called `natural´.
3. - Having the right to develop a patent on a product or production process.
4. - Enjoy a governmental franchise that gives the company the exclusive right to produce a particular good or service area.
When a market has a composition of monopoly, there is just one firmthat supplies the property or assets of a specific basket of goods.
In terms of market monopoly is often called “good” that arises as a consequence of the will fo the majority of consumers in a truly democratic process (market) voting with their buying and abstention from purchase order to decide which provider is which should prevail over its competitors.
This decision is undeniable from thedemocratic point of view because it is born of the will of the majority of consumers without government interference, and have to allocated its scarce resources to those they consider to better meet. The decision is ultimately up to the consumer, true ruler of the market process.
Economists have developed theories to explain the complex behavior of the monopolist and the differences of this with acompany that operates in a competitive.
A monopolist, like any other business, has to face to driving forces:
1.- A set of conditions of demand for the good or service that produces.
2.- A set of cos conditions that determine how much to play for the resources needed to produce and the work required for its production.

Any firm or company must adjust production to maximize profits, thatis, to maximize the difference between income form sales and cost to be covered to produce the quantity of good sold. The production level that maximizes profits is given by the amount that can put the maximum possible price.
There are several types of monopoly, which are:
1.- Natural monopoly.
2.- Pure monopoly.
3.- Monopsony.
4.- Trusts.
5.- Cartels.
6.- Mergers.
7.- Artificial.
8.-Oligopoly.








Total earnings. Total loss.



Consumer surplus and deadweight loss. Greatest Economic Benefit.




2.- MONOPOLY MARKET REGULATION.
What is regulation?
* Rules set by government or their agencies that seek the control the operations of firms who whomany have monopoly power in their own industry.
* Regulation is designed to deal with the problem of the market failure- where markets fail to reach an optimal allocation of resources.
* Monopoly power may lead to consumers being exploited( prices charged above the true marginal cost of supply)- leading to excess profits being made by suppliers in the market.
* In term of regulationof monopoly the government attemps to prevent operations that are against the public interest- so called anti-competitives practises.

Regulation and the structure of the market.
Problem occur when the market structure in a given industry becomes monopolistic- if a merger or a take- over causes a firm to supply more than 25% of the market output(defines as a working monopoly). Mergers are...
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