Briefly state the basic characteristic of pure monopoly.

A pure monopoly is a market structure where one company is the single source for a product and there are no close substitutes for the product available. for a provider to maintain a pure monopoly, there must be barriers preventing competitors from entering the market. Being a single seller of the product, they have full control over price. A monopolist can fix whatever price he wishes to fix for his product but cannot charge a price that a customer will not be able to bear. Pure monopolist enjoys economies of scale in the long run due to entry barriers.

E.g. Utility companies, such as water and electricity, in particular towns, Professional sports leagues.DeBeers diamonds etc.

The basic characteristics of a pure monopoly are as follows:

1) There is only one seller/producer in the entire industry.

2) There are strong entry & exit barriers like economies of scale, control over resources, patents, trademarks copyrights, etc, which prevent new entrants in the industry.

3) The firm is the price maker & decides price which is to its advantage.

4) There are no close substitutes to the products sold by a monopolist.

5) Supernormal profits can be earned by the pure monopolist in the long run.