Chapter Eight: Pure Monopoly

Chapter Eight: Pure Monopoly

8.1 Characteristics of Pure Monopoly (02:13)
This clips discusses the key characteristics of pure monopoly, including single seller with no close substitutes, price maker, and blocked entry.
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8.2 Four Entry Barriers related to Monopoly (05:15)
This clip introduces four major types of entry barriers, including economies of scale, patents and licenses, control of essential resources, and strategic maneuverings.
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8.3 A Crucial Difference between Monopoly & Pure Competition (01:47)
This clip points out that, whereas a purely competitive firm faces a perfectly elastic demand curve set at the ongoing market price, a monopolist faces a downward sloping demand curve. This difference is crucial because it implies that a monopolist can increase sales only by charging a lower price and, thus, its marginal revenue is less than the output price.
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8.4 Marginal Revenue Curve of a Monopoly (07:22)
This clip explores the relationship between demand curve and marginal revenue curve of a monopolist, explaining why the firm’s MR curve lies below the market demand curve. The lesson also points out the tension between social marginal benefit and private marginal benefit when monopoly is involved.
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8.4a Linear Demand & Marginal Revenue of a Monopoly (02:23)
This clip expands on clip 8.4 and focuses on the case in which the demand curve is linear, reiterating the tension between social marginal benefit and private marginal benefit when monopoly is involved.
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8.5 Profit Maximization under Monopoly (06:37)
This clip explores the price and output decisions of a profit-maximizing pure monopoly, as well as the monopoly’s profits and losses.
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8.6 Productive and Allocative Efficiency under Monopoly (06:43)
This clip compares the inefficiency of pure monopoly relative to a purely competitive industry, assuming identical cost structures. Due to the tension between social and private marginal benefits, output is lower and price is higher under monopoly. The lesson demonstrates that the monopolistic firm achieves neither productive nor allocative efficiency, resulting in deadweight loss.
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8.7  Cost Complications under Monopoly (02:34)
This clip explores whether a monopolist has a lower or higher average cost structure than corresponding firms in purely competitive industry. Four factors that can potentially lead to cost differences between the two types of firms are discussed.
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8.8 Economies of Scale and Natural Monopoly (04:37)
This clip defines natural monopoly as the firm whose monopolistic status is a direct result of an extensive economies of scale of the production process of the industry in question. The lesson also explores factors contributing to scale economies, including the start-up cost effect and the network effect.
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8.8a Start-up Costs and Economies of Scale (02:22)
This clip expands on clip 8.8 and focuses on how start-up costs can lead to economies of Scale.
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8.8b Network Effects and Economies of Scale (01:34)
This clip expands on clip 8.8 and focuses on how network effects can lead to economies of Scale.
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Micro-8.9 X-Inefficiency under Monopoly (02:24)
This clip introduces the concept of X-inefficiency which increases unit cost of production. It is pointed out that monopolists are more likely to suffer from X-inefficiency than competitive firms.
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8.10 Rent-seeking Behaviors under Monopoly (01:30)
This clip introduces the concept of rent-seeking behavior and argues that monopolists tend to engage in rent-seeking behavior which entails substantial costs and is inefficient from society’s viewpoint.
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8.11 Price Discrimination: Introduction (03:08)
This clip introduces the concept of price discrimination and explains why a monopolist may prefer to charge different prices to different groups of consumers.
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8.12 Conditions for Price Discrimination (01:57)
This clip explores the conditions under which price discrimination is possible.
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8.13 Segregating the Market via Price Elasticity of Demand (04:16)
This clip explains how a monopolist can separate consumers into different groups based on their price elasticity of demand. Real world examples of market segregation are provided.
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8.14 Price Discrimination: A Simple Graphical Analysis (03:31)
This clip shows how a monopolist can practice price discrimination to enhance its profit.
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8.15 Anti-trust Regulations (02:24)
This clip introduces the two anti-trust foundations of the United States: the Sherman Act of 1890 and the Clayton Act of 1914.
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