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class="link-black font-14 my-10"><a href="/money/monopoly-economics#ref390038-1">Introduction</a></li><li class="link-black font-14 my-10"><a href="/money/monopoly-economics#ref34150">Types of market structures</a></li><li class="link-black font-14 my-10"><a href="/money/monopoly-economics#ref34155">Market conduct and performance</a></li><li class="link-black font-14 my-10"><a href="/money/monopoly-economics/Workable-competition#ref34162">Workable competition</a></li><li class="link-black font-14 my-10"><a href="/money/monopoly-economics/Workable-competition#ref390038-references">References</a></li></ul><div class="font-14 font-weight-bold mt-20">Read More</div><div class="TableOfContents_RelatedArticle__yK5m6" data-testid="RelatedContents"><a href="/money/Jean-Tirole" class="link-black" data-testid="RelatedContent-1-1996921-1"><div class="card card-sm card-horizontal my-15" data-testid="Card"><div class="card-media" data-testid="CardMedia" style="aspect-ratio:50/40"><img loading="lazy" src="https://cdn.britannica.com/53/257153-050-8E95381C/Winner-of-the-Nobel-Prize-in-Economics-in-2014-Jean-Tirole-during-a-conference-at-the-Rafael-del-Pino-Foundation-in-Madrid.jpg?c=crop&h=40&w=50" alt="Jean Tirole" data-testid="IrisImage"/></div><div class="card-body" data-testid="CardBody"><div class="font-14">Jean Tirole</div></div></div></a><a href="/money/Maurice-Allais" class="link-black" data-testid="RelatedContent-1-15980-1"><div class="card card-sm card-horizontal my-15" data-testid="Card"><div class="card-media" data-testid="CardMedia" style="aspect-ratio:50/40"><img loading="lazy" src="https://cdn.britannica.com/52/164952-004-B743A67B/Maurice-Allais-2001.jpg?c=crop&h=40&w=50" alt="Maurice Allais, 2001." data-testid="IrisImage"/></div><div class="card-body" data-testid="CardBody"><div class="font-14">Maurice Allais</div></div></div></a><a href="/money/market" class="link-black" data-testid="RelatedContent-1-365647-1"><div class="card card-sm card-horizontal my-15" data-testid="Card"><div class="card-media" data-testid="CardMedia" style="aspect-ratio:50/40"><img loading="lazy" src="https://cdn.britannica.com/06/199806-050-68A2802C/stock-market-exchange-sao-paulo-brazil-south-america-b3.jpg?c=crop&h=40&w=50" alt="traders in Sao Paulo, Brazil" data-testid="IrisImage"/></div><div class="card-body" data-testid="CardBody"><div class="font-14">market</div></div></div></a></div></div><button class="btn btn-outline-undefined TableOfContents_MobileTableOfContentsButton__dHpRi d-md-none mb-20 w-100 d-none" data-testid="MobileTableOfContents" type="button" aria-label="Table Of Contents" style="--category-color:var(--orange-light)"><svg stroke="currentColor" fill="currentColor" stroke-width="0" viewBox="0 0 24 24" height="1em" width="1em" xmlns="http://www.w3.org/2000/svg"><path fill="none" d="M0 0h24v24H0V0z"></path><path d="M4 10.5c-.83 0-1.5.67-1.5 1.5s.67 1.5 1.5 1.5 1.5-.67 1.5-1.5-.67-1.5-1.5-1.5zm0-6c-.83 0-1.5.67-1.5 1.5S3.17 7.5 4 7.5 5.5 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mb-sm-10"><h1 class="mb-5">monopoly and competition</h1><div class="mb-10 font-20 text-gray-700">economics</div><div class="mb-10" data-testid="ArticleUtilityBar"><button class="btn btn-outline-blue btn-xs py-5 px-10 shadow-sm mr-5" data-testid="ArticleUtilityBar-Print" type="button" aria-label="Print"><svg stroke="currentColor" fill="currentColor" stroke-width="0" viewBox="0 0 24 24" class="ArticleUtilityBar_UtilityButtonIcon__6w04y mr-5" height="1em" width="1em" xmlns="http://www.w3.org/2000/svg"><path fill="none" d="M0 0h24v24H0z"></path><path d="M19 8H5c-1.66 0-3 1.34-3 3v6h4v4h12v-4h4v-6c0-1.66-1.34-3-3-3zm-3 11H8v-5h8v5zm3-7c-.55 0-1-.45-1-1s.45-1 1-1 1 .45 1 1-.45 1-1 1zm-1-9H6v4h12V3z"></path></svg>Print</button><button class="btn btn-outline-blue btn-xs py-5 px-10 shadow-sm mr-5" data-testid="ArticleUtilityBar-Cite" type="button" aria-label="Cite"><svg stroke="currentColor" fill="currentColor" stroke-width="0" viewBox="0 0 24 24" 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12c0-1.71 1.39-3.1 3.1-3.1h4V7H7c-2.76 0-5 2.24-5 5s2.24 5 5 5h4v-1.9H7c-1.71 0-3.1-1.39-3.1-3.1zM8 13h8v-2H8v2zm9-6h-4v1.9h4c1.71 0 3.1 1.39 3.1 3.1s-1.39 3.1-3.1 3.1h-4V17h4c2.76 0 5-2.24 5-5s-2.24-5-5-5z"></path></svg>Links</button><span hidden="" style="position:fixed;top:1px;left:1px;width:1px;height:0;padding:0;margin:-1px;overflow:hidden;clip:rect(0, 0, 0, 0);white-space:nowrap;border-width:0;display:none"></span></div><div class="" data-testid="BylinesWrapper"><strong class="font-12 mr-5 text-center">Written by</strong><span class="mr-5" data-testid="Byline"><span class="Byline_popoverTrigger__xVs4j font-14" id="_R1jiksvf7ksq">Joe S. Bain</span></span><div class="popover AuthorPopover_AuthorPopover__0W0b4" data-testid="Popover"><a class="font-weight-semi-bold" href="/money/author/Joe-S-Bain/141">Joe S. Bain</a><div class="AuthorPopover_shortBio__1tFaf mt-5 font-14 font-serif text-gray-700 line-clamp clamp-4">Professor of Economics, University of California, Berkeley, 1949–75. Author of <i>Industrial Organization; Barriers to New Competition.</i></div><div data-popper-arrow="true"></div></div></div><strong class="font-12 mr-5">Fact-checked by</strong><span class="mr-5" data-testid="Byline"><span class="Byline_popoverTrigger__xVs4j font-14" id="_R1liksvf7ksq">The Editors of Encyclopaedia Britannica</span></span><div class="popover AuthorPopover_AuthorPopover__0W0b4" data-testid="Popover"><a class="font-weight-semi-bold" href="/money/author/The-Editors-of-Encyclopaedia-Britannica/4419">The Editors of Encyclopaedia Britannica</a><div class="AuthorPopover_shortBio__1tFaf mt-5 font-14 font-serif text-gray-700 line-clamp clamp-4">Encyclopaedia Britannica's editors oversee subject areas in which they have extensive knowledge, whether from years of experience gained by working on that content or via study for an advanced degree. They write new content and verify and edit content received from contributors.</div><div data-popper-arrow="true"></div></div><div class="caption mt-5 d-flex" data-testid="ContentDateAndHistory"><span>Updated: <time dateTime="Nov. 22, 2024">Nov. 22, 2024</time></span></div></div><div class="TableOfContents_TableOfContents__g8WLR d-none" data-testid="TableOfContents"><div class="font-16 font-weight-bold">Table of Contents</div><hr class="mt-0"/><ul class="TableOfContents_TableOfContentsList__yU1tL p-0 mt-0 mb-0 list-unstyled pl-5" style="--category-color:var(--orange-light)"><li class="link-black font-14 my-10"><a href="/money/monopoly-economics#ref390038-1">Introduction</a></li><li class="link-black font-14 my-10"><a href="/money/monopoly-economics#ref34150">Types of market structures</a></li><li class="link-black font-14 my-10"><a href="/money/monopoly-economics#ref34155">Market conduct and performance</a></li><li class="link-black font-14 my-10"><a href="/money/monopoly-economics/Workable-competition#ref34162">Workable competition</a></li><li class="link-black font-14 my-10"><a href="/money/monopoly-economics/Workable-competition#ref390038-references">References</a></li></ul><div class="font-14 font-weight-bold mt-20">Read More</div><div class="TableOfContents_RelatedArticle__yK5m6" data-testid="RelatedContents"><a href="/money/Jean-Tirole" class="link-black" data-testid="RelatedContent-1-1996921-1"><div class="card card-sm card-horizontal my-15" data-testid="Card"><div class="card-media" data-testid="CardMedia" style="aspect-ratio:50/40"><img loading="lazy" src="https://cdn.britannica.com/53/257153-050-8E95381C/Winner-of-the-Nobel-Prize-in-Economics-in-2014-Jean-Tirole-during-a-conference-at-the-Rafael-del-Pino-Foundation-in-Madrid.jpg?c=crop&h=40&w=50" alt="Jean Tirole" data-testid="IrisImage"/></div><div class="card-body" data-testid="CardBody"><div class="font-14">Jean Tirole</div></div></div></a><a href="/money/Maurice-Allais" class="link-black" data-testid="RelatedContent-1-15980-1"><div class="card card-sm card-horizontal my-15" data-testid="Card"><div class="card-media" data-testid="CardMedia" style="aspect-ratio:50/40"><img loading="lazy" src="https://cdn.britannica.com/52/164952-004-B743A67B/Maurice-Allais-2001.jpg?c=crop&h=40&w=50" alt="Maurice Allais, 2001." data-testid="IrisImage"/></div><div class="card-body" data-testid="CardBody"><div class="font-14">Maurice Allais</div></div></div></a><a href="/money/market" class="link-black" data-testid="RelatedContent-1-365647-1"><div class="card card-sm card-horizontal my-15" data-testid="Card"><div class="card-media" data-testid="CardMedia" style="aspect-ratio:50/40"><img loading="lazy" src="https://cdn.britannica.com/06/199806-050-68A2802C/stock-market-exchange-sao-paulo-brazil-south-america-b3.jpg?c=crop&h=40&w=50" alt="traders in Sao Paulo, Brazil" data-testid="IrisImage"/></div><div class="card-body" data-testid="CardBody"><div class="font-14">market</div></div></div></a></div></div><button class="btn btn-outline-undefined TableOfContents_MobileTableOfContentsButton__dHpRi d-md-none mb-20 w-100" data-testid="MobileTableOfContents" type="button" aria-label="Table Of Contents" style="--category-color:var(--orange-light)"><svg stroke="currentColor" fill="currentColor" stroke-width="0" viewBox="0 0 24 24" height="1em" width="1em" xmlns="http://www.w3.org/2000/svg"><path fill="none" d="M0 0h24v24H0V0z"></path><path d="M4 10.5c-.83 0-1.5.67-1.5 1.5s.67 1.5 1.5 1.5 1.5-.67 1.5-1.5-.67-1.5-1.5-1.5zm0-6c-.83 0-1.5.67-1.5 1.5S3.17 7.5 4 7.5 5.5 6.83 5.5 6 4.83 4.5 4 4.5zm0 12c-.83 0-1.5.68-1.5 1.5s.68 1.5 1.5 1.5 1.5-.68 1.5-1.5-.67-1.5-1.5-1.5zM7 19h14v-2H7v2zm0-6h14v-2H7v2zm0-8v2h14V5H7z"></path></svg><span class="font-18 ml-5">Table Of Contents</span></button><span hidden="" style="position:fixed;top:1px;left:1px;width:1px;height:0;padding:0;margin:-1px;overflow:hidden;clip:rect(0, 0, 0, 0);white-space:nowrap;border-width:0;display:none"></span><div class="font-serif font-18 lh-lg dropCapArticle"><div class="Article_floatedHeroComponents__8_NjL"><div class="mb-10 BorderlessCard_BorderlessCard__u5tTW d-inline-block w-100 pb-0 rounded border p-10" data-testid="BorderlessCard"><div class="w-100 position-relative d-flex"><img loading="eager" src="https://cdn.britannica.com/17/138717-050-1B01467B/Adam-Smith-John-Kay-1790.jpg?w=385" alt="Adam Smith" width="385" data-testid="IrisImage" class="border rounded w-100"/><button class="btn btn-outline-blue-dark btn-xl btn-circle CircleIconButton_CircleIconButton__HkIE0 position-absolute bottom-10 right-10 bg-white" data-testid="CircleIconButton" type="button" aria-label="Open full size image" id="_Rcksvf7ksq"><svg stroke="currentColor" fill="currentColor" stroke-width="0" viewBox="0 0 24 24" height="1em" width="1em" xmlns="http://www.w3.org/2000/svg"><path fill="none" d="M0 0h24v24H0V0z"></path><path d="M15.5 14h-.79l-.28-.27A6.471 6.471 0 0 0 16 9.5 6.5 6.5 0 1 0 9.5 16c1.61 0 3.09-.59 4.23-1.57l.27.28v.79l5 4.99L20.49 19l-4.99-5zm-6 0C7.01 14 5 11.99 5 9.5S7.01 5 9.5 5 14 7.01 14 9.5 11.99 14 9.5 14z"></path><path d="M12 10h-2v2H9v-2H7V9h2V7h1v2h2v1z"></path></svg></button><div class="tooltip font-16" data-testid="Tooltip">Open full sized image<div data-popper-arrow="true"></div></div></div><div class="font-serif text-gray-700 mt-5 font-12 font-italic mb-10 text-left">© Photos.com/Getty Images</div></div></div><div class="QuickFacts_quickFacts__FMF2_ border rounded p-20 mb-20 ml-sm-20 mx-auto font-14 bg-white font-sans-serif"><div class="" data-testid="QuickFacts-Facts"><div class="QuickFacts_fact__5ukCJ position-relative line-clamp clamp-3"><dl class=""> <dt class="font-weight-bold text-capitalize mr-5">Key People:</dt><dd><a href="/biography/Learned-Hand" topicid="254084">Learned Hand</a></dd><dd><a href="/money/Jean-Tirole" topicid="1996921">Jean Tirole</a></dd><dd><a href="/money/Maurice-Allais" topicid="15980">Maurice Allais</a></dd><dd><a href="/money/Francis-Ysidro-Edgeworth" topicid="179110">Francis Ysidro Edgeworth</a></dd><dd><a href="/money/Edward-Hastings-Chamberlin" topicid="104974">Edward Hastings Chamberlin</a></dd></dl></div></div></div><section class="HTMLContent_HTMLContent__cOyPs" data-testid="HTMLContent"><span id="ref390038-1" data-level="1" /><p><strong><span id="ref243880" />monopoly and <span id="ref243879" /><a href="/topic/competition-economics">competition</a></strong>, basic factors in the structure of economic <span id="ref1283023" /><a href="/money/market">markets</a>. In <a href="/money/economics">economics</a>, monopoly and competition signify certain complex relations among firms in an industry. A monopoly implies an exclusive possession of a <a href="/money/market">market</a> by a supplier of a product or a service for which there is no substitute. In this situation the supplier is able to determine the <span id="ref1283024" /><a href="/money/price-economics">price</a> of the product without fear of competition from other sources or through substitute products. It is generally assumed that a monopolist will choose a price that maximizes <a href="/money/profit">profits</a>.</p><span id="ref34150" data-level="1" /><h2 class="h2">Types of market structures</h2><p>Competition is directly influenced by the means through which companies produce and distribute their products. Different industries have different market structures—that is, different market characteristics that determine the relations of sellers to one another, of sellers to buyers, and so forth. Aspects of market structure that underlie the competitive landscape are: (1) the degree of concentration of sellers in an industry, (2) the degree of product differentiation, and (3) the ease or difficulty with which new sellers can enter the industry.</p><span id="ref34151" data-level="2" /><h2 class="h3"><span id="ref920465" />Concentration of sellers</h2><p>Seller concentration refers to the number of sellers in an industry together with their comparative shares of industry sales. When the number of sellers is quite large, and each seller’s share of the market is so small that in practice he cannot, by changing his selling price or output, perceptibly influence the market share or income of any competing seller, economists speak of <span id="ref920520" />atomistic competition. A more common situation is that of <span id="ref243882" /><a href="/money/oligopoly">oligopoly</a>, in which the number of sellers is so few that the market share of each is large enough for even a modest change in price or output by one seller to have a perceptible effect on the market shares or incomes of rival sellers and to cause them to react to the change. In a broader sense, oligopoly exists in any industry in which at least some sellers have large shares of the market, even though there may be an additional number of small sellers. When a single seller supplies the entire output of an industry, and thus can determine his selling price and output without concern for the reactions of rival sellers, a single-firm monopoly exists.</p><span id="ref34152" data-level="2" /><h2 class="h3"><span id="ref243883" /><a href="/topic/product-differentiation">Product differentiation</a></h2><p>The structure of a market is also affected by the extent to which those who buy from it prefer some products to others. In some industries the products are regarded as identical by their buyers—as, for example, basic farm crops. In others the products are differentiated in some way so that various buyers prefer various products. Notably, the criterion is a subjective one; the buyers’ preferences may have little to do with tangible differences in the products but are related to <a href="/money/advertising">advertising</a>, brand names, and distinctive designs. The degree of product differentiation as registered in the strength of buyer preferences ranges from slight to fairly large, tending to be greatest among infrequently purchased consumer goods and “prestige goods,” particularly those purchased as gifts.</p><span id="ref34153" data-level="2" /><h2 class="h3"><span id="ref920466" />Ease of entry</h2><p>Industries vary with respect to the ease with which new sellers can enter them. The <a href="/money/barriers-to-entry">barriers to entry</a> consist of the advantages that sellers already established in an industry have over the potential entrant. Such a barrier is generally measurable by the extent to which established sellers can persistently elevate their selling prices above minimal average costs without attracting new sellers. The barriers may exist because costs for established sellers are lower than they would be for new entrants, or because the established sellers can command higher prices from buyers who prefer their products to those of potential entrants. The economics of the industry also may be such that new entrants would have to be able to command a substantial share of the market before they could operate profitably.</p><p>The effective height of these barriers varies. One may distinguish three rough degrees of difficulty in entering an industry: blockaded entry, which allows established sellers to set monopolistic prices, if they wish, without attracting entry; impeded entry, which allows established sellers to raise their selling prices above minimal average costs, but not as high as a monopolist’s price, without attracting new sellers; and easy entry, which does not permit established sellers to raise their prices at all above minimal average costs without attracting new entrants.</p><span id="ref34155" data-level="1" /><h2 class="h2"><span id="ref920467" />Market conduct and performance</h2><p>It is helpful to distinguish the related ideas of market conduct and market performance. Market conduct refers to the price and other market policies pursued by sellers, in terms both of their aims and of the way in which they coordinate their decisions and make them mutually compatible. <span id="ref920469" />Market performance refers to the end results of these policies—the relationship of selling price to costs, the size of output, the efficiency of production, progressiveness in techniques and products, and so forth.</p><p>The arguments in favour of monopolies are largely concerned with efficiencies of scale in production. For example, proponents assert that in large-scale, integrated operations, efficiency is raised and production costs are reduced; that by avoiding wasteful competition, monopolies can rationalize activities and eliminate excess capacity; and that by providing a degree of future certainty, monopolies make possible meaningful long-term planning and rational <a href="/money/investment">investment</a> and development decisions. Against these are the arguments that, because of its power over the marketplace, the monopoly is likely to exploit the consumer by restricting production and variety or by charging higher prices in order to extract excess profits; in fact, the lack of competition may eliminate incentives for efficient operations, with the result that the <a href="/money/factors-of-production">factors of production</a> are not used in the most economical manner.</p></section></div></div><aside class="d-none d-lg-block cm-right-rail col-da-320 z-1" data-testid="RightRail"></aside></div><div data-page-index="1" data-testid="PageSentinel"></div></div></main><footer class="Footer_Footer__h6k1G text-align-center pb-100" data-testid="Footer"><div class="pt-30 pt-md-40 mx-25 mx-md-0"><a href="/money"><img loading="lazy" src="https://cdn.britannica.com/money/assets/Money-475x60-footer-2x.png?h=47&w=390" alt="Britannica Money Logo" data-testid="IrisImage"/></a></div><div class="Footer_SubLinks__z2QDt my-30 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In \u003ca href=\"/money/economics\"\u003eeconomics\u003c/a\u003e, monopoly and competition signify certain complex relations among firms in an industry. A monopoly implies an exclusive possession of a \u003ca href=\"/money/market\"\u003emarket\u003c/a\u003e by a supplier of a product or a service for which there is no substitute. In this situation the supplier is able to determine the \u003cspan id=\"ref1283024\" /\u003e\u003ca href=\"/money/price-economics\"\u003eprice\u003c/a\u003e of the product without fear of competition from other sources or through substitute products. It is generally assumed that a monopolist will choose a price that maximizes \u003ca href=\"/money/profit\"\u003eprofits\u003c/a\u003e.\u003c/p\u003e\u003c!--[P-1]--\u003e\u003cspan id=\"ref34150\" data-level=\"1\" /\u003e\u003ch2 class=\"h2\"\u003eTypes of market structures\u003c/h2\u003e\u003cp\u003eCompetition is directly influenced by the means through which companies produce and distribute their products. Different industries have different market structures—that is, different market characteristics that determine the relations of sellers to one another, of sellers to buyers, and so forth. Aspects of market structure that underlie the competitive landscape are: (1) the degree of concentration of sellers in an industry, (2) the degree of product differentiation, and (3) the ease or difficulty with which new sellers can enter the industry.\u003c/p\u003e\u003c!--[P-2]--\u003e\u003cspan id=\"ref34151\" data-level=\"2\" /\u003e\u003ch2 class=\"h3\"\u003e\u003cspan id=\"ref920465\" /\u003eConcentration of sellers\u003c/h2\u003e\u003cp\u003eSeller concentration refers to the number of sellers in an industry together with their comparative shares of industry sales. When the number of sellers is quite large, and each seller’s share of the market is so small that in practice he cannot, by changing his selling price or output, perceptibly influence the market share or income of any competing seller, economists speak of \u003cspan id=\"ref920520\" /\u003eatomistic competition. A more common situation is that of \u003cspan id=\"ref243882\" /\u003e\u003ca href=\"/money/oligopoly\"\u003eoligopoly\u003c/a\u003e, in which the number of sellers is so few that the market share of each is large enough for even a modest change in price or output by one seller to have a perceptible effect on the market shares or incomes of rival sellers and to cause them to react to the change. In a broader sense, oligopoly exists in any industry in which at least some sellers have large shares of the market, even though there may be an additional number of small sellers. When a single seller supplies the entire output of an industry, and thus can determine his selling price and output without concern for the reactions of rival sellers, a single-firm monopoly exists.\u003c/p\u003e\u003c!--[P-3]--\u003e\u003cspan id=\"ref34152\" data-level=\"2\" /\u003e\u003ch2 class=\"h3\"\u003e\u003cspan id=\"ref243883\" /\u003e\u003ca href=\"/topic/product-differentiation\"\u003eProduct differentiation\u003c/a\u003e\u003c/h2\u003e\u003cp\u003eThe structure of a market is also affected by the extent to which those who buy from it prefer some products to others. In some industries the products are regarded as identical by their buyers—as, for example, basic farm crops. In others the products are differentiated in some way so that various buyers prefer various products. Notably, the criterion is a subjective one; the buyers’ preferences may have little to do with tangible differences in the products but are related to \u003ca href=\"/money/advertising\"\u003eadvertising\u003c/a\u003e, brand names, and distinctive designs. The degree of product differentiation as registered in the strength of buyer preferences ranges from slight to fairly large, tending to be greatest among infrequently purchased consumer goods and “prestige goods,” particularly those purchased as gifts.\u003c/p\u003e\u003c!--[P-4]--\u003e\u003cspan id=\"ref34153\" data-level=\"2\" /\u003e\u003ch2 class=\"h3\"\u003e\u003cspan id=\"ref920466\" /\u003eEase of entry\u003c/h2\u003e\u003cp\u003eIndustries vary with respect to the ease with which new sellers can enter them. The \u003ca href=\"/money/barriers-to-entry\"\u003ebarriers to entry\u003c/a\u003e consist of the advantages that sellers already established in an industry have over the potential entrant. Such a barrier is generally measurable by the extent to which established sellers can persistently elevate their selling prices above minimal average costs without attracting new sellers. The barriers may exist because costs for established sellers are lower than they would be for new entrants, or because the established sellers can command higher prices from buyers who prefer their products to those of potential entrants. The economics of the industry also may be such that new entrants would have to be able to command a substantial share of the market before they could operate profitably.\u003c/p\u003e\u003c!--[P-5]--\u003e\u003cp\u003eThe effective height of these barriers varies. One may distinguish three rough degrees of difficulty in entering an industry: blockaded entry, which allows established sellers to set monopolistic prices, if they wish, without attracting entry; impeded entry, which allows established sellers to raise their selling prices above minimal average costs, but not as high as a monopolist’s price, without attracting new sellers; and easy entry, which does not permit established sellers to raise their prices at all above minimal average costs without attracting new entrants.\u003c/p\u003e\u003c!--[P-6]--\u003e\u003cspan id=\"ref34155\" data-level=\"1\" /\u003e\u003ch2 class=\"h2\"\u003e\u003cspan id=\"ref920467\" /\u003eMarket conduct and performance\u003c/h2\u003e\u003cp\u003eIt is helpful to distinguish the related ideas of market conduct and market performance. Market conduct refers to the price and other market policies pursued by sellers, in terms both of their aims and of the way in which they coordinate their decisions and make them mutually compatible. \u003cspan id=\"ref920469\" /\u003eMarket performance refers to the end results of these policies—the relationship of selling price to costs, the size of output, the efficiency of production, progressiveness in techniques and products, and so forth.\u003c/p\u003e\u003c!--[P-7]--\u003e\u003cp\u003eThe arguments in favour of monopolies are largely concerned with efficiencies of scale in production. For example, proponents assert that in large-scale, integrated operations, efficiency is raised and production costs are reduced; that by avoiding wasteful competition, monopolies can rationalize activities and eliminate excess capacity; and that by providing a degree of future certainty, monopolies make possible meaningful long-term planning and rational \u003ca href=\"/money/investment\"\u003einvestment\u003c/a\u003e and development decisions. Against these are the arguments that, because of its power over the marketplace, the monopoly is likely to exploit the consumer by restricting production and variety or by charging higher prices in order to extract excess profits; in fact, the lack of competition may eliminate incentives for efficient operations, with the result that the \u003ca href=\"/money/factors-of-production\"\u003efactors of production\u003c/a\u003e are not used in the most economical manner.\u003c/p\u003e\u003c!--[P-8]--\u003e"])</script><script>self.__next_f.push([1,"7:[\"$\",\"$L18\",null,{\"initialArticle\":{\"contentInfo\":{\"contentId\":\"1-390038-1\",\"browserTitle\":\"Monopoly and competition | Definition, Structures, Performance, \u0026 Facts\",\"metaDescription\":\"Monopoly and competition, basic factors in the structure of economic markets. A monopoly implies an exclusive possession of a market by a supplier of a product for which there is no substitute. 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