Monopolistic Market

AAA

DEFINITION of 'Monopolistic Market'

A type of market that features one, if not all, of the traits of a monopoly such as high price levels, supply constraints, or excessive barriers to entry. Because this type of market would be comprised of one supplying firm, consumers would have no choice but to purchase solely from this firm. Without proper legislation or controls, this firm possesses the power to raise prices without adversely affecting demand for its products/services. This type of market stands in contrast to a perfectly competitive market.

VIDEO

Loading the player...

BREAKING DOWN 'Monopolistic Market'

A monopolistic market favors companies to the detriment of consumers. The market, in this case, is usually defined as a stock market sector such as telecommunications or media firms, where this type of market behavior is likely to be found.

There are several groups and trade organizations, such as the FCC, WTO and EU governing council, that ensure that monopolistic markets do not form and also create legal ramifications for companies that pursue market-cornering policies. The Microsoft antitrust trials of the late '90s show that the markets are still fighting against monopolistic behavior, even today.

RELATED TERMS
  1. Buyer's Monopoly

    A buyer's monopoly, or "monopsony", is a market situation where ...
  2. World Trade Organization - WTO

    An international organization dealing with the global rules of ...
  3. Demand

    An economic principle that describes a consumer's desire and ...
  4. Antitrust

    The antitrust laws apply to virtually all industries and to every ...
  5. Economic Moat

    The competitive advantage that one company has over other companies ...
  6. Monopoly

    A situation in which a single company or group owns all or nearly ...
Related Articles
  1. Investing

    What's a Monopolistic Market?

    A monopolistic market has a significant number of characteristics of a pure monopoly. Though there may be more than one supplier, the market has high prices, suppliers tightly control availability ...
  2. Economics

    Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!
  3. Trading Strategies

    Setting Vs. Getting: What Is A Price-Taker?

    Learn how the economic term "price taker" may separate investors from traders.
  4. Personal Finance

    Antitrust Defined

    Check out the history and reasons behind antitrust laws, as well as the arguments over them.
  5. Economics

    Explaining Market Penetration

    Market penetration is the measure of how much a good or service is being used within a total potential market.
  6. Economics

    Calculating the Marginal Rate of Substitution

    The marginal rate of substitution determines how much of one good a consumer will give up to obtain extra units of another good.
  7. Economics

    Understanding Cost of Revenue

    The cost of revenue is the total costs a business incurs to manufacture and deliver a product or service.
  8. Investing Basics

    What are Class B Shares?

    Class B shares are one classification of common stock issued by corporations.
  9. Stock Analysis

    5 Reasons Thoratec Corp. Keeps Impressing Investors

    Learn about Thoratec Corporation and its position in its industry. Understand five key factors why the company has impressed investors.
  10. Investing News

    The Brief: Where Is the Bottom?

    Where is the market going today after yesterday's bumpy ride?
RELATED FAQS
  1. How is profit maximized in a monopolistic market?

    In a monopolistic market, there is only one firm that produces a product. There is absolute product differentiation because ... Read Full Answer >>
  2. What are the characteristics of a monopolistic market?

    A monopolistic market is a market structure that has the characteristics of a pure monopoly. A monopoly exists when there ... Read Full Answer >>
  3. What is the difference between a monopolistic market and perfect competition?

    A monopolistic market and a perfectly competitive market are two market structures that have several key distinctions, such ... Read Full Answer >>
  4. What is the difference between a monopolistic market and monopolistic competition?

    A monopolistic market is an economic market structure that exists when there is only one supplier of a particular good or ... Read Full Answer >>
  5. Where do penny stocks trade?

    Generally, penny stocks are traded through the use of the Over the Counter Bulletin Board (OTCBB) and through pink sheets. ... Read Full Answer >>
  6. Where can I buy penny stocks?

    Some penny stocks, those using the definition of trading for less than $5 per share, are traded on regular exchanges such ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  2. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
  3. Tiger Cub Economies

    The four Southeast Asian economies of Indonesia, Malaysia, the Philippines and Thailand. Tiger cub economy indicates that ...
  4. Gorilla

    A company that dominates an industry without having a complete monopoly. A gorilla firm has large control of the pricing ...
  5. Elephants

    Slang for large institutions that have the funds to make high volumes trades. Due to the large volumes of stock that elephants ...
  6. Widow's Exemption

    In general terms, a widow's exemption refers to the amount that can be deducted from taxable income by a widow, thereby reducing ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!