Limitations of Monopolists Price Policy

Monopolists Price Policy Assignment Help

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Limitations of Monopolists Price Policy

There is always the fear of potential competition. A very high price will encourage new producers to come into the field and the very position of the monopolist will be in danger. There is also the fear of substitutes. A monopolist has also to reckon with the possibility of substitutes being found. Then, there is the fear of intervention by the State. In the interest of the consumers the State may be compelled to fix a maximum price above which the monopolist may not be allowed to change. The public may also become apathetic towards the consumption of that article. Thus a monopolist in the matter of charging price cannot dictate like a whimsical monarch. He cannot act absolutely and arbitrarily. He has always to keep in mind dangers of potential competition, consumers’ reaction and governmental action.


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