Sources of Monopoly Power

1 year ago
Microeconomics

**The less elastic a demand curve, the more monopoly a firm has.

Three factors determine a firm’s elasticity of demand:

  1. The elasticity of market demand – the market demand limits the potential for monopoly power
  2. The number of firms in the market – If there are many firms, it is unlikely that any one firm will be able to affect price
  3. The interaction among firms

Barrier to entry – Condition that impedes entry by new competitors

 

Bijay Satyal
Dec 1, 2021
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