Question

In: Economics

state and explain circumstances under which a firm may acquire monopolistic power in the market.

state and explain circumstances under which a firm may acquire monopolistic power in the market.

Solutions

Expert Solution

1. If the firm has the sole right to a production techniques which denies other firms from the use of this technique.

2. If the firm has control over the strategic inputs. This makes the firm to have a sole access to production inputs of a commodity.

3. If the firm ejoys economies of scale. Economies of scale allows the firm produce at a lower cost than the other inputs.


A firm may acquire monopolistic power if the firm has unique production techniques, strategic control and economies of scale. 

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