A market structure that has the characteristics of a pure monopoly is said to be monopolistic market. A monopoly exists when there are numerous consumers to buy any product and only one supplier or manufacturer exists for a particular goods or service.
The monopoly has full control of the market in a monopolistic market. Due to total market control, a monopoly can control the price and supply of a good or service.
This characteristic makes it a price maker and controller. In order to generate a profit a monopoly can change the supply and price of a goods or service and be a profit maximizer. By determining the point at which its marginal revenue equals its marginal cost, it can find the level of output that maximizes its profit.
A monopoly usually consists of one seller that manages the production and distribution of a goods or service.
Since there is only one supplier and firms are not able to easily enter or exit, there are no substitutes for the goods or services. As there are no other comparable goods or services in the market, a monopoly also has absolute product differentiation .
