how can monopoly create problem in market economy?
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According to general equilibrium economics, a free market is an efficient way to distribute goods and services, while a monopoly is inefficient. Inefficient distribution of goods and services is, by definition, a market failure.
In a free market, the prices of goods and services is determined by open competition. Producers increase or decrease production according to consumer demand.
In a monopoly, a single supplier controls the entire supply of a product. This creates a rigid demand curve. That is, demand for the product remains relatively stable no matter how high (or low) its price goes. Supply can be restricted to keep prices high. This leads to underprovision, or scarcity.
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