Why do monopoly emerge? Do you agree that the monopolist is not free to determine both price and quantities to be sold as per his whims and fancy? Give reasons.
Answers
Monopolies emerge when organisations come up with unique products and services, which becomes popular in the market. In case of patents and other laws, it becomes almost impossible for other companies to offer such products or services.
In such a situation, the monopolist is able to determine the price and quantities sold, according to their wish.
The MRTP (Monopolies and Restrictive Trade Practices) Act of 1969 was introduced in India, to restrict this kind of power in the hands of a few organisations.
When there is no completion at the market as the product is unique, the products become a monopoly, and the manufacturer determines the price & the quantity of the product to be sold at whims.
This type of situation may happen due to stringent patent laws as they do not allow others to deal with the same type of product.
The monopolist determines the quantity of the supply, and the price often exploits the consumers.