That monopoly power is influenced by factors such as barriers to entry, the number of competitors, advertising and the degree of product differentiation
Monopoly power is a firm's ability to set prices above competitive levels. Four key factors determine how much of that power a firm holds: barriers to entry, the number of rivals, advertising, and product differentiation.
Real World
Google controls over 90% of the UK search engine market partly because its brand recognition and data network effects act as powerful barriers to entry, making it almost impossible for rivals to attract users away.
Exam Focus
When asked to 'analyse' monopoly power, always link each factor to its effect on price-making ability for full marks.
Price Elasticity of Demand
PED = % change in quantity demanded ÷ % change in price
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