Why do monopolies exist, Managerial Economics

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Why Do Monopolies Exist?

Monopolists have market power and as a consequence will charges higher prices and generate less output than a competitive industry. It produces profit for the monopolist within the short and long run.

Profits will not persist within the long run unless there is a barrier to entry. It can take the type of:

a. Control and manage of natural resources or inputs,

b. Technological superiority, or

c. Economies of scale,

d. Legal restrictions imposed through governments, comprising patents and copyrights.


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