S&D #31 : Monopoly

TEST & CW DUE

TUES!

Monopoly

1. 1 Firm / Supplier2. No close substitutes3. VERY high barriers of entry4. Control price

*Rare! Anything that is profitable attracts substitutes!

*Generally illegal due to antitrust legislation

Types of Legal Monopolies

1. Natural Monopoly: 1 seller is most efficient due to economies of scale

– Cable, electricity, water, etc

2. Geographic Monopoly: limited by location

• Only grocery store in town• Fewer due to internet

Other types…

3. Technological monopoly: new products gain patent become sole owners of the technology

3. Gov. Monopoly: when gov is sole supplier of product

• Public utilities: water, roads, sewer

Cell Phone Service Providers!

• TMobile

S&D #32: Is this a legal?• AT&T is attempting to buy T-Mobile. If AT&T is

able to do this, how much of the cell phone service market will it control?

• Who has the power to stop the merger? • What are 2 reasons why they should merge?• Who has the worst cell phone service?• What could happen to price if this occurs? What

happened in Canada?• What does this article suggest that Obama

should do? • Do you think this merger will improve service or

price?