Monopoly

Abstract

A monopoly exists when supply of a particular good or service is in the hands of a single supplier, either a single firm (pure monopoly) or a group of firms who jointly coordinate their marketing plans (a cartel). By controlling supply a monopolist can influence price. However a monopolist lacks complete market power because of an inability to control demand. A monopolist can therefore either fix price and allow demand to determine output, or fix output and allow demand to determine price.