Textbook Guide Economics: Clayton Antitrust Act, Deadweight Loss, Price Discrimination

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1 Dec 2016
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ECO101H1 Full Course Notes
ECO101H1 Full Course Notes
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A firm that is a monopoly is the only seller of its product for which there are no close substitutes. Other firms cannot enter the market because of the high barriers to entry that are nearly impossible to overcome: monopoly resources when the firm owns key resources and does not allow access to other firms. For example, if an aluminum company owned all sources of bauxite, a key raw material for aluminum production: government regulation the government awards a single firm the right to produce a good or service. Patents and copyrights are a good example of this. The government awards these exclusive rights to companies to give them an incentive for innovation: the production process also called a natural monopoly. A single firm that can produce the good or service at a much lower cost than if there were other, competing firms.

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