Micro 4/17

Monopoly

• one seller
• many buyers
• barriers to entry (source of monopoly power)
• no close substitutes (electricity) (other source of monopoly power)
• firms are price setters (price searchers)

Price Discrimination

• Three Requirements:
• monopoly power
• segment the market (hair cuts for women)
• no arbitrage (buying something and selling at a higher price)