(BQ) Part 2 book "Microeconomics" has contents: Monopoly, oligopoly and strategic interaction, game theory, fame theory, factor supply, the exchange economy, general equilibrium with production, welfare economics, economics of information,. and other contents. | Find more at CHAPTER 12 Monopoly Key words and phrases l downward-sloping demand curve, marginal revenue curve, demand elasticity and marginal revenue, positive profits l relative inefficiency of monopoly l returns to scale and natural monopoly, regulation, multipart tariff l producer surplus l price discrimination, perfect price discrimination, degrees of price discrimination l revenue maximisation under monopoly l lump sum taxes Introduction The perfectly competitive firm faced a horizontal demand curve and was able to sell all it pleased at the going market price. The monopolistic firms we shall analyse in this chapter face downward-sloping demand curves. As we shall see, there is no unique set of influences which ensures that the demand curve faced by every monopolist is the market demand curve for its product, but for the moment it will suffice if the reader thinks of such a firm as being the sole seller of a good in an industry where, for one rea son or another, the entry of competitors is quite impossible. In such a situation the market demand curve for the good does indeed become the demand curve that faces the monopolist. The essence of monopoly power is that it enables the firm to raise its price because there are no other suppliers to whom consumers can turn when it does so: a firm cannot increase its price when there are alternative suppliers of an identical product willing to satisfy demand at the old price. Monopoly power of this type obviously exists when there is only a single firm in the market; but we shall discover below that such monopoly power can also exist when there are several firms supplying the market for a particular type of product provided that each firm’s version of the product in question differs from that of other firms. This possibility implies that the monopoly model is a good deal more general than it seems at first sight. Find more at Chapter 12 Monopoly Before .
