- No good substitute
- Single firm
- high barriers to entry Not to charge highest possible price but to maximize profit
- Price Searchers with high entry barriers
- Have some price setting power and face a downward sloping demand curve.
- Consumer’s limited option
- Allocative inefficiency (output level below P=MC);
- Entry & exit not motivated by profit
- Legal protection allow seeking abnormal economic profit,
- Seeking favour from Government ( rent-seeking) => waste of resources.
Forms of entry barriers
- Patents
- Control over a resource
- Economies of scale
- Government license/legal barrier
- Resources control
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