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Advantages and Disadvantages of Monopoly

Some Advantages and Disadvantages of Monopoly are as follows. So let us check it out some information of advantages and disadvantages to know more about monopoly. Some other entities related to monopoly such as oligopoly, monopolistic competition, perfect competition , monopsony are also listed at the end of the article.

Advantages of Monopoly are:

  1. Monopoly makes lots of profit hence it can be used to encourages Research and Development (R&D).
  2. Economic of scale can be gained and consumer may get benefit of it.
  3. Monopoly encourages innovation.
  4. Competiton for corporate control.
  5. Abnormal profits in long term can be seen in monopoly of products or services.
  6. There is possibility of price discrimination during monopoly.
  7. Monopoly avoids undesirable duplication of products or services.
  8. New technologies that may reduce cost of monopoly can be made by competitors.
  9. A firm or company can enjoy the power of monopoly.
  10. Profit gained by monopoly can be used for investment.
  11. There is no competiton in market as there is only one single seller of particular product or services.

Disadvantages of Monopoly are:

  1. Prices and costs of products or services may increase any time due to monopoly.
  2. Power and wealth.
  3. Costly functions.
  4. Potential of supply to be limited - less choice.
  5. Poor level of service is observed dur to lack of competiton which may lead to low quality and outdated products or services.
  6. Potential for inefficiency due to lack of competition.
  7. Monopoly may restrict the quantity of goods they supply in order to keep prices of product high to earn more profit.
  8. Exploitation of consumers or customers and they are charged high prices for low quality of products.
  9. Buying problems can be observed in monopoly.
  10. Monopoly may reduce the satisfaction of the customers.
  11. Sometimes monopolies may product low quality product as there is no competitor to produce better quality product.
  12. Monopolies may not invest their money and time in developing new products because they can sell their existing products without any competition.

Some of the terms relate to monopoly are : Oligopoly, perfect competiton, monopolistic competition and monopsony. Also find out other articles related to monopoly.

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