Monopolies

Running Head : Monopolies

Monopolies Monopolies

Monopoly is said to exist in an economy when there is a full or enough control over the products or services by any person or entity . It occurs due to the lack of economic competition and alternate goods or services In this process , the entity or a person enjoys a greater market share because of the absence of competitors whereas , in a healthy competition he might not get the larger market share and higher prices that he charge in a monopolistic condition (Mankiw , 2005

There

is a naturally occurring monopoly and a government-created monopoly

Natural monopoly occurs when the service providers (often suppliers have an irresistible advantage of cost over its possible competitors due to the high-fixed costs that arise when they start-up their business in an industry . This type of monopoly exists because it enables the entity to achieve the economies of scale in its industry moreover , the entity can achieve the competence in production and supply . For example , KESC is the entity that ensures the supply of electricity throughout the city of Karachi it charges a relatively fixed cost and a low variable cost per unit that is consumed . It is not easy for others to put a high cost and start-up the same business because there is an existing entity that has taken control of the whole supplying process and if another entity wants to do the same then it would not be beneficial for it and it would also clutter the...