Using Real World examples, illustrate both some of the potential :: Economics

Using Real World typefaces, illustrate both some of the potentialbenefits of monopolies and explain how monopoly firms may be able to utilise in price discrimination practices.A noncompetitive market place or gild is one where at that place is non existentcompetition. There is one leading market domineer that is producingand supplying the entire market. In a monopolistic market the companyin question can determine prices or the amount of products sell towork in their advantage. The power of a monopoly company is that itcan completely dominate a particular market subject to whether or notthere are existing or up and coming substitutes. By this what is meantis that there could well be a substitute for the monopolists product.An example of this would be old public sector companies desire BritishRail. They controlled the entire rail travel market however therewere always alternative forms of travel like coach or air travel. Thisproves that there is no real possibility of a pure mon opoly as thereare always alternatives. There is another(prenominal) variant that decides toclassification of a monopoly. This is the barriers of entry into thatparticular industry or sector of the market. If there are low barriersof entry, this will stimulate competition amid firms competing forconsumers of that market sector, however if the barriers are of highentry, then it is easy to say that the company dominating the marketis that of a monopolistic nature. This echoes the fact that amonopolistic firm can indeed decide on price or quantity sold toinfluence demand. They can only influence demand to a certain extentbecause of other alternatives to their own product e.g. travel anddifferent forms of transport. By doing this, a monopolist company canmake non-standard profits in the long term future.A major advantage of a monopolistic firm is that it can use pricediscrimination as a spear in gaining more money. This is where a firmcan make the consumer pay for a different price for the exact sameservice. A good example of this is through British telecom and how itis cheaper to ring during off peak tariffs rather that during the daywhen the cost of a phone call is substantially higher than that of aphone call during the evening. However, for price discrimination tohappen there must be a number of factors occurring to make pricediscrimination work for the company. First, the company must know itscustomers and know that they have different demands to that of otherpeople. This may be the travel of commuters into the city for work.