11. Sources of monopoly power
A monopoly, unlike a perfectly competitive firm, has some market
power. Thus, it can raise its price, within limits, without
quantity demanded falling to zero. The main way monopolies retain
their market power is through barriers to entry, which prevent
other companies from entering monopolized markets and competing for
customers.
Consider the market for tanzanite. The mines for this
blue-purple gemstone, found only in Tanzania, are owned by the
local government. Given that no one...