What Does It Mean to Corner a Market?

Monopoly market economy is an extreme form of incomplete market competition. Under the conditions of a monopoly market economy, a single seller completely controls an industry, and a single seller is the sole producer in its industry. At the same time, no industry can produce similar substitutes.

Monopoly market economy

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Monopoly market economy is an extreme form of incomplete market competition. Under the conditions of a monopoly market economy, a single seller completely controls an industry, and a single seller is the sole producer in its industry. At the same time, no industry can produce similar substitutes.

Chinese name

Monopoly market economy

Field

economic

Features

Complete monopolistic competition is very rare today

the reason

"Barriers to entry" appear

Complete monopoly competition is very rare today, and it can be a unique form of monopoly in today's market economy-patents. The enterprise or individual that obtained the patent has the sole right to produce and operate the patent for a certain period of time.

There are two main reasons for the formation of a monopoly market economy under the conditions of a market economy:

First, when large-scale production shows economies of scale and reduces production costs to a large extent, there will be fewer and fewer competitors in an industry, and in an extreme case a monopoly market economy will emerge. Microsoft's Windows operating system is such an example. Microsoft can invest a lot of money in system development. The production after development has a large scale effect, and many companies do not have the capabilities of Microsoft development and research, nor can they achieve the scale effect. Formed Microsoft's monopoly in Windows operating system for many years;

Second, when "barriers to entry" occur, in extreme cases, a monopoly market economy will emerge. Barriers to entry are various barriers to entry for new companies into an industry. Economies of scale are a very common type of barriers to entry. In addition, legal restrictions, the high cost of entry, and the production of advertising and products also lead to entry. barrier.

Legal restrictions, such as patents, access restrictions, tariffs and quotas, can lead to barriers to entry; if a region internally protects a local industry and implements restrictions on the entry of products in the same industry, or that prohibits entry of products in the same industry, There is only one large enterprise in the region to produce products, so the enterprise is undoubtedly a monopoly in the industry in the region;

In envisioning a company, in terms of product development investment and advertising, are unthinkable by other companies trying to enter the industry, then the company will eventually become a monopolist in the industry, because other companies have high entry costs and cannot compete with the company. Companies compete. It can be imagined that Coca-Cola (although there are Pepsi-Cola as its competitors, in fact, these two companies are oligarchs in the industry, here are just examples), investing hundreds of millions of dollars in product advertising every year, just such a huge advertising expenditure, How many companies can afford it?

A monopoly market economy is an extreme form of incomplete competition. It is considered inefficient because it produces fewer products, but the price of the product is high, minimizing the economic surplus on the market. However, it should also be noted that a monopoly economy such as a patent is indispensable because it encourages innovation and promotes the advancement of society. In fact, the contribution of large enterprises (monopoly enterprises) to social progress in history Is very huge.

(Editor: Monopoly market economy. In the editor's opinion, it is the monopoly economy we often say, because monopoly economy should also be a unique development form of market economy under economic theory. Therefore, the editor mainly edits this entry. It is discussing the characteristics of the monopoly economy. The editor's reference is the seventeenth edition of the microeconomics of the famous economist Samuelson.)