In a monopoly, and at the expense of supply in the market one entity to control and demand, and the degree of the price offered and the control exercised by the institution or individual is greater. Predatory pricing. This feature of the advantages of a monopoly consumers. These are short term market gains when prices dropped to meet the demand of rare product. Suppliers and consumers directly benefit from an attempt to monopolize the company to increase the sale of business marketing.
With regard to the demand for the product or service offered by the company monopoly or individual, and is dictated by the price elasticity of the ratio of the absolute value of the increase in prices and demand in the market.
At the expense of absolute control of the market, and monopolies display a tendency to lose efficiency over a period of time. With one product lifetime, and innovative design and marketing techniques rear seat.
When the market was designed to serve the monopoly and the lack of commercial competition or the lack of goods and viable products shrinking the scope of “perfect competition. ”
Monopoly arises in a variety of circumstances: there are types of goods and a service does not accept by its nature, or not in the public interest to multiple producers, it’s called natural monopolies, for example: to provide the city with water, electricity, or the trains running between two countries.
Often assume the state or municipal authorities to manage these services, or to grant a concession to a private company, subject to strict control.
Monopoly may arise in an industry, the growth of a project, and it seized on other projects. Or as a result of grab or merge of small projects in the large-scale project, Monopoly May arise due to agreement between the projects owners in a particular industry to determine the price, or divide markets among themselves, known as (cartel), and in this case there are a number of producers, such agreement among them makes them a monopoly power. Most of the countries have been working on the subject of monopolies control.
Economists have for many decades argued the benefits of setting public utility tariffs on the basis of marginal cost. This view is expressed in many classic economic texts on regulation.
One common objection to marginal-cost pricing is that, in the presence of economies of scale, a simple linear price equal to marginal cost would not allow the regulated firm to recover sufficient revenue to cover its total costs.
In those cases where the regulator is unable to set the marginal price for each service equal to its marginal cost, economic theory still places central emphasis on reducing the deadweight loss.
The deadweight-loss hypothesis has a hard time explaining why regulators fail to pursue policies which are efficient under the conventional economic theory, such as Ramsey pricing.
Another puzzle for the conventional economic approach to regulation is the heavy emphasis on price stability. There is a sizeable amount of evidence that price and service stability is one of the primary concerns of regulators.