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Overview

When a company has market dominance in a particular industry, it is said to have monopoly power. (For example, a market share of more than 40%). Setting higher prices or limiting output could be examples of monopoly power abuse. Abuse of monopoly power can result in deadweight welfare loss, a reduction in choice, and obstacles for other suppliers.

Evidence of Monopoly Power Abuse

Excessively high prices are being charged. If they're making a lot of high profits, it's a sign that prices are higher than they would be in a competitive situation.

Predatory Pricing. This implies lowering the price and selling below cost to drive competitors out of business.

Production and access to technological advancements are being restricted.

Unfair treatment of competitors, such as giving certain parties preferential treatment while putting others at a disadvantage.

Vertical restraints. The monopoly firm imposes prices or restrictions on its suppliers or retailers.

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Economics notes  on

Lack of competition and monopoly

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