Friday, May 31, 2013

wHY Monopolies Arise

Barriers to entry is caused by 3 points :
  • Strategic ownership of factors of production
  • Government give  the exclusive right to the one firm to produce goods
  • Production cost make a single producer more efficient than a large number of producers. 

Government - Created Monopolies
 A firm maybe limit entry with give a firm an exclusive right to sell good in the certain markets.
Governments- Created Monopolies
Patents and Copyrights law are two examples how government create a monopoly to meet the public needs.
Natural Monopolies
A firm is a natural monopoly  when a firm can supply goods and services.

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