Using Real World examples, illustrate both some of the potential :: Economics

Using Real World examples, illustrate both some(a) of the potentialbenefits of monopolies and explain how monopoly levels may be able toengage in price inconsistency practices.A monopoliseric food commercialise or federation is one where at that place is non existentcompetition. There is one leading commercialise domineer that is producingand supplying the entire market. In a noncompetitive market the confederacyin question base determine prices or the union of products sold towork in their utility. The power of a monopoly company is that itcan completely dominate a particular market subject to whether or not in that location are existing or up and culmination substitutes. By this what is meantis that there could well be a substitute for the monopolists product.An example of this would be old public sector companies kindred BritishRail. They controlled the entire rail be active market however therewere always alternative forms of travel like coach or descent travel. Thisproves that there is no real possibility of a pure monopoly as thereare always alternatives. There is another variant that decides to categorisation of a monopoly. This is the barriers of entry into thatparticular industry or sector of the market. If there are low barriersof entry, this will stimulate competition between firms competing forconsumers of that market sector, however if the barriers are of highentry, then it is easy to say that the company dominating the marketis that of a monopolistic nature. This echoes the fact that amonopolistic firm can indeed decide on price or quantity sold toinfluence affect. They can only influence demand to a certain extentbecause of other alternatives to their own product e.g. travel anddifferent forms of transport. By doing this, a monopolist company can guard non-standard profits in the long term future.A major advantage of a monopolistic firm is that it can use pricediscrimination as a tool in gaining more money. This is where a firmc an make the consumer pay for a different price for the admit sameservice. A good example of this is through British telecommunication and how itis cheaper to ring during off peak tariffs rather that during the daywhen the cost of a phone tender is substantially higher than that of aphone call during the evening. However, for price discrimination tohappen there must(prenominal) be a number of factors occurring to make pricediscrimination work for the company. First, the company must know itscustomers and know that they have different demands to that of otherpeople. This may be the travel of commuters into the city for work.