ABSTRACT
The model of monopoly is another of the traditional or ‘marginalist’ (MC = MR for
equilibrium) models of the firm. Typically, the smaller and more closed the economy,
the more predominant is the monopoly form of market structure in certain industries. In
theory, as an economy opens to global trade and investment, the importance of domestic
monopolies should recede. Nevertheless, there are industries where, even in the most
open economies, the market structure remains one of monopoly. This is particularly so
in the case of domestic utility services and products such as electricity and water supply.
This chapter examines how the monopolist market operates and considers monopoly in
its many forms such as multi-plant, price discriminating and bi-lateral monopoly.
