Monopoly - is the creation of conditions in the market, due to which only one company can produce and sell a product that has no analogues.This can be traced to restrict access to the market and the full implementation of price controls.In other words, pure monopoly implies domination of big monopoly enterprises fully controlling prices.The level of consumer demand is constrained by the establishment of very high prices.Monopolist estimated demand and the price is set at a level that is able to provide the greatest return on investment.
Monopoly can be represented by utility companies, without whose services can not do none of the companies (eg water utility companies or state electricity suppliers).This so-called natural monopolies exist which justify the complete satisfaction of the public interest.
Rural pure monopoly is present in the person of supplier of chemical fertilizers, agricultural machinery, and it may be breeding, seed farms and businesses to provide repair services.The main features of a monopoly can be attributed:
- the presence of only one company, affecting prices, while supply management;
- absence from the market of similar products;
- controlling the raw material market monopolist companies are not allowed the emergence of new producers.
other words, the market is pure monopoly represented by one vendor - often government agencies.
State monopoly with pricing policy can be solved the problem of different nature, namely:
- fixing prices below cost of goods of social importance to create the necessary level of living of the population;
- appointment of prices, taking into account cost recovery or to obtain sufficient income;
- a decision on the establishment of inflated prices in order to reduce consumption.
should be noted that in the classic sense of pure monopoly does not exist in reality.There is always a risk of potential competition from imports.In the case of conflict one seller to one buyer, a so-called bilateral monopoly.
in a monopoly price can not be given value.It is set by the monopolist to the dimensioning of offers of goods, taking into account demand and cost.
pricing strategy plays a huge role in these economic conditions.So, now the monopoly be taken into account that the volume of goods produced in direct proportion to their realizable value.
Therefore, to obtain the maximum profit entity can be used a tool such as price discrimination, based on the establishment of different prices for the same type of product.The difference in prices is not related to cost.The main purpose of such a mechanism - using every opportunity to maximize the price per unit of goods.