Monopoly
A monopoly has a single supplier in the relevant market, protected by barriers that limit effective entry. Defining the product and geographical market matters. A monopolist may influence price but is still constrained by demand, substitutes, costs and possible regulation. It cannot generally choose any price and any quantity independently, nor is exceptional profit guaranteed.
Worked example
An isolated area has one legally authorised supplier of a specified network service. Its pricing possibilities depend on demand, regulation and costs, even though no second supplier serves that defined market.
Common mistake
Do not call every large business a monopoly or assume a sole supplier can charge unlimited prices without losing demand. Identify the relevant market and barriers.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | BT | Direct | September 2026–June 2027 |
| FIA | FBT | Direct | September 2026–June 2027 |