Forms of Market — Economics STD 12 Commerce / Arts — Question

1. Natural Monopoly : A natural monopoly arises when a particular type of natural resource is located in a particular region like petrol or crude oil in Gulf countries. Also natural advantages such as good location, business reputation, age – old establishment s etc., confer natural monopoly. Similarly, many professional skills, natural talents give monopoly power. E.g. A singer or actor has monopoly of his skill, talent.

2. Legal Monopoly : Legal monopolies are those monopolies which are recognised by law. Legal protection granted by the Government in the form of trade mark, copy rights, license etc., give monopoly power to the firms. Here the potential competitors are not allowed to copy the product registered under the given brand names, patents or trade marks according to the law.

3. Joint Monopoly or Voluntary
Monopoly : This monopoly arises through mutual agreement and business combinations like the formation of cartels, syndicate, trust etc. For e.g. Oil producing nations have come together and formed a Cartel OPEC (Organisation of Petroleum Exporting Countries).

4. Simple Monopoly : A simple monopoly firm charges a uniform price for its product to all the buyers.

5. Discriminating Monopoly : A discriminating monopoly firm charges different prices for the same product to different buyers. E.g. a doctor, a teacher, a lawyer, etc., charges different fees from the people. The practice of charging different prices from different buyers is called “Price discrimination.”

6. Private Monopoly : When an individual or a private firm enjoys the monopoly of manufacturing and supplying a particular product, it is called private monopoly. The main aim of private monopolist is profit maximisation.

7. Public Monopoly : When a field of production is solely owned, controlled and operated by the government, it is regarded as public monopoly. Eg. Public utility service like Railways, Electricity, Water Supply etc. Since these monopolies are service motivated and welfare oriented they are also called welfare monopolies.