ECON 1B03 Lecture Notes - Lecture 9: Deadweight Loss, Shaw Communications, Natural Monopoly
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ECON 1B03 Full Course Notes
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Document Summary
The basic reason for monopoly is barriers to entry. There are four basic sources of these barriers: a single rm owns a key resource that no other rm can access or has a close substitute for. In reality, this is rare because rms are big and international in scope: the government gives one rm the exclusive right to produce and sell some good. Can give a rm sale rights to sell in a particular market. Example: cable tv companies: an industry is a natural monopoly; a single rm can supply a good or service to an entire market at a lower cost than could two or more rms. A natural monopoly will arise when there are increasing returns to scale (irs) over a relevant range of output. The rm operates on the downward sloping part of its average cost curve: monopoly by good management.
