Introduction
The market is a system or institution where buyers and sellers interact for the purpose of exchanging goods and services for a price. The sellers present their goods and or services and the buyers pay the set price for them. Monopoly in the market is a situation whereby one, seller offers a commodity or service pursued by many buyers (McKenzie). The seller might be an individual or a firm. This stems from the barriers that have been set to discourage other competitors from penetrating the market or ownership of a key resource. The barriers might be economic barriers, political barriers or deliberate action. This kind of market affects the many sellers in several ways which includes: - complication in the prices set, complication on the quality of goods or services offered,
Complication of price
For instance, when there is a monopoly in the market the monopolistic firm has all the powers in price determination in the sense that buyers have no alternatives (Cameron). This complicates the prices because he might choose to set fairly high prices for goods that would have otherwise gone a cheaper price. Monopoly in basic commodities can have such price complications.
In other cases, monopolistic firms set a fairly low price on commodities or services because they enjoy economies of scale. Given the high initial cost needed to produce the offered item, the environment becomes unfavourable for competitor sellers to penetrate the market. This imposes an economic barrier to their competitors (Carter).
Complication of quality
Given the power that the monopolistic firm has over the market the only regulating factor is the demand that they offer for goods or services. In cases where there are no substitutes they may choose to compromise the quality of the goods by reducing the production stages or relaxing the grade of service. This leads to products that are poor quality that are accepted while the firm makes large profit margins.
In the service industry, the clients may suffer from paying for services that are hardly available e.g. irregular water supply, frequent power failures and bad telephone services.
In other cases, the monopolistic firm produces high quality products and sells at a lower price making the competitors fail to match the demand. This benefits the buyer at the moment but increases the monopolistic powers to the firm (Lawrence).
Complication of supply
The monopolistic firm may complicate the supply by choosing when a particular commodity to be available and in what quantities. It may also discriminate to which buyers its goods or services are to be sold this (Jacobson). This complexity, heavily affect the demand and the prices. However, on the other hand, they may choose to flood the market with a given commodity this is a deliberate action to kill any competition.
Complication of profits
In most case, the monopolistic firms make a huge profit by setting a high price that exceeds the cost of production. They decide the price to set by having control over the quality supply and the buyers lacking alternatives.
In some deliberate cases, the firm may choose to make low profit by enjoying economies of scale to face out a competitor out of the market.
Examples of monopoly in market
In most of the developing countries especially in Africa, the governments control the key sector e.g. power, water, railway system, mining, minerals and telecommunication. They have put legislative measure to ensure that a private player into the sector has to face some harsh terms like high licence fee. This discourages private investors. The impact of this has been continuously poor services to the citizens in the badly managed institutions.
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