A "Pure Monopolist" is when there is a single supplier that dominated the entire market. This would mean that the market has 100% concentration and one firm holds all the market share. There are relatively few examples of this in real life but one of them is the London Underground, a Monopoly that exists as it would be inefficient to allow more than one firm to operate (duplication of resources would be too high). Another example of this would be a local water board.

A working monopoly, on the other hand, is a firm that holds more than 25% of the market share. For example, the market for smartphones is a working monopoly as Samsung hold around 31.8% of the market share (Greater than 25%).

The competitions and market authority have also decided that any firm who holds more than 40% of a markets sales is a dominant firm in the industry. (e.g. Coca-Cola)

Any firm who has a downwards sloping AR (average revenue) curve is said to be able to set prices. This allows for the monopoly to use price discrimination. Firms can EITHER choose to set prices OR set quantities.

Barriers to entry have to exist in order for the monopoly to continue as, without them, firms will enter the market to try to compete for some supernormal profits. Monopolies also benefit from imperfect information, this is when consumers know less than producers which gives them a competitive edge.


Issues with Monopolies:
- Prices are higher than in a competitive market.
- Loss or allocative efficiency (P≠MC)
- Can negatively impact those with low household incomes as they may not have enough disposable income to afford monopolists goods/services.
- Absence of competition may lead to inefficiencies in production.
- High prices can limit output which, in the long run, can lead to economies of scale not being exploited.
- Monopolists may not innovate as quickly as those in a competitive market (even though they have enough finance - in the form of supernormal profits - to do so).

Advantages of Monopolies include:
- Faster R&D MAY occur as the firm has a high amount of finance to spend on it.
- Natural monopolies SHOULD benefit from economies of scale
- Some "Domestic" monopolies will still face competition from foreign (international) firms.
- Price discrimination may benefit some customers (usually those of low incomes).

Some more "quick" issues with monopolies include:
- Service (why would they need to look after consumers?)
- Prices (they have a large incentive to put prices high)
- Efficiencies (they are not efficiency)
- Welfare (they usually lead to a net welfare loss in the economy)