Types of Monopoly

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Types of Monopoly

Monopoly can be broadly classified into two types:

(i) simple monopoly or a single price monopoly and
(ii) discriminating monopoly.

The monopoly firm that charges a single or uniform price for its product from all buyers and all markets is called a simple monopoly. Due to its control over market supply, the monopoly firm generally charges a higher price than competitive market by restricting output below the competitive level. This control over output also enables a monopolist to discriminate between different customers and different markets, and charge different prices from them for the same product.

A discriminating monopoly or a multi price monopoly charges different prices for different units sold (such as power supply company which charges lower price per unit for a certain level of consumption and higher prices per unit for consumption above that level) or different prices from different customers (such as different price per unit of power from domestic consumers, commercial consumers, industrial consumers, etc.) or different price per unit in different markets (may be higher price per unit in less competitive domestic market and a lower price per unit in highly competitive world market).


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