#cfa-level-1 #microeconomics #monopoly #reading-16-the-firm-and-market-structures #section-2-analysis-of-mkt-structures #study-session-4
Finally, the least competitive market structure is monopoly
. In pure monopoly markets, there are no other good substitutes for the given product or service. There is a single seller, which, if allowed to operate without constraint, exercises considerable power over pricing and output decisions. In most market-based economies around the globe, pure monopolies are regulated by a governmental authority. The most common example of a regulated monopoly is the local electrical power provider. In most cases, the monopoly power provider is allowed to earn a normal return on its investment and prices are set by the regulatory authority to allow that return.