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Anali Ekonomskog fakulteta u Subotici
2010, iss. 24, pp. 33-42
article language: English
document type: Review Paper

Modeling the enterprise monopoly power
University of Novi Sad, Faculty of Economy

e-mail: ntrivic@ef.uns.ac.rs

Abstract

It is beyond doubt that monopolies take larger market shares in most national economies and market economy in general. Therefore, the analyses of this type are gaining significance and are inspiration for this research. The focus is measuring monopoly power of a company. Usually, managers are familiar with limited amount of information about average and marginal revenue curves that leaves decision about optimal production level and price an open question. In theory, equilibrium price and quantity of a monopolist are determined by marginal revenue and marginal cost equality. Thus, this condition should become the rough rule easily implemented in practice. Monopolistic and oligopolistic companies have the influence on market price determination that enables them to incur higher profits as they charge prices above their marginal costs. These companies have monopoly power and what is required is stressing its determinants, possibilities of its probable consequences.

Keywords

monopoly; equilibrium price and quantity; rough rule; Lerner's index; demand price elasticity; monopoly power

References

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