Question

Give an example of each type, a near-monopoly and a regulated monopoly and suggest how their monopoly power affects the prices they charge and the service they provide.

(Typed out answers)

Answer 1

Lets first see what are near-monopolies and regulated monopolies.

Near-monopolies are companies that have moved into a space and have taken over a significant portion of the market share. Such companies are often very large. Also, they tend to diversify, making other products to help boost both market share and profit. While the companies leave some room for competition, they can virtually be considered monopolies.

Regulated monopoly is a situation where the cost structure etc makes it impossible for there to be more than one firm. A natural monopoly arises when average costs are declining over the range of production that satisfies market demand. This typically happens when fixed costs are large relative to variable costs. As a result, one firm is able to supply the total quantity demanded in the market at lower cost than two or more firms—so splitting up the natural monopoly would raise the average cost of production and force customers to pay more.
Then the government doesnt have an option but to let the monopoly be and just to regulate it.
Most public utilities companies are an example of regulated monopoly.

An example of near monopoly would be Intel. Intel technically does have a competitor-AMD, but they so thoroughly dominate the desktop processor market that they are a near monopoly.

An example of natural monopoly would be a railrpad company, such as Amtrack.

A near monopoly can charge very high prices as technically they are not a monopoly and hence not regulated by the government, but on the other hand they are a monopoly for all intents and purposes and hence do charge very high prices as the competitor just wont be able to compete in any meaningful sense.

Regulated monopolies are different. Since they are regulated, they cant charge very high prices. Their monopoly power is regulated by the government. Since most of them provide essential utilities to the public, their prices are kept low and often government subsidizes them.