Monopoly Power

• Formation of Monopolies

  Only a small number of firms will survive due to costs involved. Firms across highly concentrated industries possess significant market power. This makes it easier for them to exploit employees
• Monopolisation

  When a firm uses its dominant market position to eliminate existing competition or prevent new firms from entering the market
• Price Discrimination


  When a firm sells the same type of good/service in different markets at different prices. Firms attempt to charge different prices to different consumers according to their willingness and ability to pau
• Exclusive Dealing

  When a firm sets conditions for supply that exclude retailers from dealing with other competitors - prohibited by the Competition and Consumer Act 2010
• Collusion & Market Sharing

  When firms get together and agree on a pricing and market-sharing arrangement that reduces effective competition between them and inhibits entry of new competition into the market
• Government-owned Monopolies

  Governments choose to own monopolies because firms owned by the private sector face no competitive pressure to reduce prices, placing them in a position to exploit consumers using high prices and limited input.
• Privatisation

  When the government sells its business to shareholders, aiming to increase efficiency and competition
• Corporatisation


  Involves changes to GBEs to operate more independently. They can make decisions and operate similar to private sector firms with the aims to increase efficiency
• Competition

  Governments establish bodies to regulate anti-competitive behaviour by firms in the market.