Monopoly

A market structure in which one seller faces no close substitute for its product. Its market power can let it influence price and restrict output.

Marginal revenue: The additional revenue a firm earns from selling one more unit of output. A monopolist must lower the price on existing sales to sell more, so marginal revenue falls below price.
Market definition: The process of identifying the products and geographic area that constrain a firm's decisions. Whether a seller is a monopolist depends on which products and locations count as substitutes.
Perfect competition: A market structure with many firms selling identical products and no individual firm able to influence price. It is the benchmark opposite to monopoly in standard models of market power.
Standard Oil: An American oil company that dominated refining and was dissolved under antitrust law in 1911. Its rise and breakup became a landmark case in U.S. enforcement against monopoly.
Consumer welfare: The benefits consumers receive from goods and services, often assessed through prices, quality, and choice. Monopoly may reduce consumer welfare through higher prices, lower output, or diminished choice.
Profit maximization: The choice of production or pricing that yields a firm's greatest possible profit. A monopolist chooses output by comparing marginal revenue with marginal cost.
Substitute good: A good that consumers may use in place of another, especially when its relative price changes. The availability of close substitutes limits a monopolist’s ability to raise prices.
Monopolistic competition: A market structure with many firms selling differentiated products and relatively easy entry. Product differentiation gives firms some pricing power without creating a single-seller market.
AT&T breakup: The 1982 settlement that divided the American telephone system's dominant company into separate businesses. The case illustrates how regulators addressed monopoly in a network industry.
Productive efficiency: A condition in which goods are produced at the lowest feasible cost. A protected monopolist may face weaker pressure to minimize production costs.

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