Define Monopoly. State the main features of Monopoly.

Monopoly: The word monopoly is a Latin word. It is composed of two words:

(i) Mono-which means single, and (ii) Poly-which means seller.

Thus, monopoly, is a market situation in which there is a single seller of a good with no close substitutes.

Main Features of Monopoly:

(i) Single Seller / Producer of the product- Monopoly is said to exist when there is only one seller of the product. A monopolist may be the only person, a few partners or in the form of a joint stock company. In simple words. In Monopoly, the number of buyers are large. No one buyer can influence the price by his individual actions.

(ii) No Close Substitutes-The product produced by a monopolist has no close substitutes. So, the monopoly firm has no fear of competition from new or existing products.

(iii) Restrictions on Entry of New firms-In a monopoly type of market, there is strict barrier on the entry of new firms. Monopolists faces no competition.