Monopoly

A monopoly is a condition where only a single firm provides a particular good in the market. Monopolies can set prices at any level to optimize their profits, therefore a monopoly is a price maker. The term doesn't necessarily mean that the firm is the only one producing a certain good, but when looking at a different perspective, it is the relevance of their market share compared to the closest competitor. For instance, if a product sold by a monopolistic firm has a 98% market share and the rest shares the remaining 2%, then it is also considered as a monopoly.

The cause for such overwhelming market share are due to the factors restricting a venue for a competitive market like total control of a key quality resource that makes a substitute good irrelevant as an alternative, patents, copyrights or the startup cost to equal the structure of the monopolistic firm are too high. Because of this commanding control over the availability of the good, the quantity they produce for a good is equal to the total demand of the market, therefore, maximizing profits by setting the price to which marginal cost would equal their marginal revenue for those extra units produced are feasible.

Monopoly

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