Monopoly

This article treats the type of market monopoly, for which monopoly of the same name in the area physics see Monopoly (physics)

Monopoly (Greek monos = "alone" and pole in =) calls one "sells" one Market situation (Type of market), in for economic property only one offerer or only one nachfrager exists.

This leads frequently to the fact that these (that Monopolist) with its Price structuring only on the demand and/or. the offer consideration to take must, not on that Competition. On the assumption of the goal of a maximization of profit a monopolist must consider that higher prices lead to a decrease of the demand at the market (the higher the price is, the less customer is ready to pay the price). This became for the first time 1838 of Augustin Cournot accurately analyzes and leads to the definition of the Cournot point. Competition several offerers would result itself rather a lower price orienting at production costs and a higher offered quantity. In particular at legal monopolies (s. u.) therefore frequently the state intervenes in the price structuring of the monopolist.

Table of contents

Developments

According to whether now that Offerer or that Nachfrager the monopoly holds, between offer and nachfragemonopol is differentiated. A nachfragemonopol becomes also Monopson called.

If only few face a monopolist instead of many inquiring he/offerers, it concerns a limited monopoly. Only if one offerer and a nachfrager arise on both sides, one speaks of one bilateral monopoly. This is to differentiate of a situation with two offerers, the in such a way specified Duo pole. There are more than one offerer or nachfrager, but nevertheless only very few on a market, then one speaks of one Oligopoly.

The term becomes colloquial Monopoly frequently also for market situations applied, with which there are several offerers, of it however one due to market power or clear competition advantages a so dominating the market position takes that he is to a large extent independent in the price formation of the competition. Specializedlinguistically this is however wrong; rather here the term "incomplete competition" is usual.

According to the kind of the monopolist one can differentiate in: Offer monopolies:

Nachfragemonopole: (mostly limited nachfragemonopole)

  • frequently with military products,
  • Products for owners of offer monopolies, z. B. High-speed courses like that ICE,
  • Products and services for federal authorities.

One calls a monopoly at any time open to attack morphologic monopoly. It is frequently for short time desirably, over for technical progress to ensure.

Causes for monopolies

According to the cause for monopolies one differentiates:

  1. Natural monopoly: The monopoly exists without adjusting influence, z. B. because an offerer alone access to certain raw materials had or exclusively important technologies (z. B. Patents). Frequently the natural monopoly results also out Market entrance barriers, in particular if a aufwaendige surface covering Infrastructure is necessary, as with eisenbahnnetzen or the supply of river, water or gas.
  2. Legal monopoly: The monopoly exists due to a legal regulation. One finds this form nowadays nearly only with (also former) State enterprises (z. B. Letter monopoly); the few exceptions like that Ignition goods monopoly or that Salt shelf are to a large extent abolished in modern economic systems.
  3. Contractual monopoly (also Collective monopoly): The monopoly exists, since all offerers or nachfrager commit themselves to common achievements and prices (approximately by Trust) and so the competition is switched off. In most countries such arrangements are usually illegal (in Germany: Law against restraints of trade).

Digital monopolies

In the hardware and still more strongly in the software industry the possibilities of loss-free digital reproduction as well as the necessity for general technical standards favour the education of "digital monopolies". Since there are hardly firmly written, open industry standards, whose observance of the state is demanded, closed quasi-standards of individual manufacturers develop. The education of dominating the market standards and thus the displacement of the competitor take place thus system-dependently many faster and absolutely than in other areas. Examples of it are Windows (operating system), Microsoft Office (Office Suite), InterNet Explorer (Browser) and Adobe Photoshop (professional treatment of pictures).

A digital monopoly within a range can be used from the monopolist to spread its market power on neighbour ranges. Often this takes place over the coupling of the monopoly product with other products of the same enterprise or over Ausschliesslichkeitsbindungen. An example is the operating system monopoly of Microsoft, which formed the basis for the expansion of the monopoly on the ranges Office Suites and Browser.

Dumping

Since a monopolistic position promises highest possible profit, a monopolist will aim at to shield the market also further before possible competitors. In order to reach this, again and again also to unfair or market-distorting means one seizes. Example of such a practice is that Dumping: Products are offered a certain time to long too not cost-hitting a corner prices, until the competitor from the market was displaced, in order to increase afterwards the prices again. This situation can also by Trust result, or from Oligopoly.

If monopolies are not broken open for natural reasons, occasionally that seizes for competition-legal reasons. An offence against that mostly lies in these cases UWG / GWB forwards.

For example the enterprise became Microsoft, a quasi-monopoly, because of abuse of its Market power condemned. The editions, to which it was subjected in the consequence, are considered however by many too weak and were so far not broken the monopoly.

Frequently however already those is enough Traversableness the monopoly out: For this it must be threatened reliably that the monopolistic position can be lost, if certain defaults are not kept. The reliability rises in particular, if those Market withdrawal costs are small.

Welfare-theoretical evaluation

Welfare-theoretically monopolies are judged generally as harmful, since a monopoly has in most cases welfare-reducing effects. For lack of competition pressure monopolists are often inefficient and a little innovation joyful (dynamic ineffizienz) are. Those Consumer can z.B. not on a lower-priced Product change, because it gives none. On the other side superelevated prices, which develop due to a monopoly, can lead also to the fact that the possible high profit the high Market entrance costs for competitors to appear acceptable or it diminishes in addition motivated Alternative one to search, in order to break the monopoly. Thus can and Investments are stimulated.

The monopolist must itself in addition, to Substitution competition Thoughts make. Behind it the acceptance hides itself that buyers transfer to equivalent products, if the prices for the monopolyistic property are too high. An example of it would be Natural gas from the former instead of Oil from Arab countries.

The moreover also the theory that can traversable markets a monopolist discipline.

Definition:

  1. Permissible industrial configuration: Evacuation of market (sum of all offered goods corresponds to the demand) & positive profits for already companies acting in the market.
  2. Stable configuration: A potential Markteintreter cannot obtain a positive profit with given price of the acting companies.
  3. Traversable market: Permissible configuration is stable.
Bsp.: The monopolist sets the monopolpreis. Is permissible, but not stable, since a potential Markteintreter could undercut the price minimum and obtain so positive profits.
Additional loads of a monopoly opposite a Polypol

Even if only few companies in the market act, the market entrance threat of other enterprises can work disciplining. Therefore the monopolist will not maximize no more his profit, but his market to secure and for price = average costs set at a natural monopoly (instead of border proceeds = marginal yield). Thus a market entrance is not worthwhile itself any longer. Met acceptance: homogeneous goods & identical cost function.

Also from a view of Consumer and Producer pension it results that a monopoly welfare-theoretically suboptimal is. While the equilibrium in Polypol with <math>p_Pol</math>/<math>X_Pol</math> , must in the case of monopoly a higher price lies (<math>p_Mon</math>) are paid, which to a smaller consumer quantity (<math>X_Mon</math>) leads. The konsumentenrente (KR) decreases/goes back due to the price increase and the quantity decrease clearly. The producer pension two opposite effects affect: On the one hand it decreases/goes back, since the monopolist can set off a smaller quantity compared with the Polypolisten only. On the other hand it profits from the possibility of being able to raise monopolpreise. Altogether is however a net welfare loss to recognize (characterized by the red surface ZL). Optimally however would be it, if the price would correspond to the neighbouring costs.

Price-theoretical considerations

In a "perfect" monopoly the monopolist is faced with a clear connection of prices and sales volumes, that Price paragraph function (PAF). It can do thus freely either the price or those Sales volume thus it selects that it thereby its Profit maximized. In that Economic theory this circumstances are as Cournot point admits. With him one can compute the profit-maximum sales volume and the profit-maximum price.

See also

 

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