Please pick up a Warm Up sheet from
the folder on the table in front, get
out a pen or pencil, and wait for
today’s question to appear on the
board.
Warm Up
How is monopolistic competition different from
pure competition?
Wednesday, March 4, 2015
Objective: Students will be able to explain and give examples
of oligopolies and monopolies.
Purpose: Understanding the structure of markets will make
you a better consumer.
Reminders
59 schools days remaining
You must pass this class in order to graduate
Monopolies
• Monopoly: only one seller of a particular product
• Most monopolies are imperfect, meaning there is some
competition, but it is only a fraction of the market
• Sherman Antitrust Act: prevents anti-competitive practices
including the establishment of monopolies
Types of Monopolies
• Natural Monopoly: a single firm can produce a product
more cheaply than any other company
• Geographic Monopoly: a monopoly based on the absence
of other sellers in a certain geographic area
• Technological Monopoly: a firm has a monopoly because it
owns or controls a manufacturing process or other scientific
advantage
Types of Monopolies
• Government Monopoly: monopoly created or owned by the
government
• Examples: US Postal Service, Amtrak, Water utility companies
• Government-granted monopoly: government grants exclusive
privilege to a private individual or firm to be the sole provider of a
good or service
• Examples: Cable companies, power companies (except in Texas), natural gas
companies, public transit companies
Case Study: AT&T
• Before 1982, AT&T was the
only phone company in the
United States
• Local service was provided
by 7 different providers, all
based in specific regions of
the country
Case Study: AT&T
• By 2005, various
mergers had occurred in
the telecommunications
industry, mainly due to
the high costs of
operation
• Currently, the
telecommunications
industry is an example of
an _______________.