Economics 1021A/B Lecture 13: Micro- Ch. 13
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ECON 1021A/B Full Course Notes
Verified Note
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Document Summary
That produces a good or service for which no close: a monopoly is a market: substitutes exists. In which there is one supplier that is protected from competition by a barrier preventing the entry of new firms: how monopoly arises. If a good has a close substitute, even if it is produced by only one firm, that firm effectively faces competition from the producers of the substitute. A monopoly sells a good that has no close substitutes. A constraint that protects a firm from potential competitors is called a barrier to entry. Three types of barriers to entry are. Ownership barriers to entry: an ownership barrier to entry occurs if one firm owns a significant portion of a key resource, during the last century, de beers owned 90 percent of the world"s diamonds. Legal barriers to entry: legal barriers to entry create a legal monopoly.