What characterizes a monopoly?

A monopoly is characterized by a market structure where a single seller controls the entire supply of a good or service. This means that the monopolist has significant market power, enabling it to set prices and determine the quantity of the product supplied without competition from other sellers. Because there is only one provider, the monopolist can effectively control market conditions, potentially leading to higher prices and reduced availability for consumers compared to a competitive market.

In a monopoly, barriers to entry are often significant, preventing other firms from entering the market and establishing competition. This can result from factors like high startup costs, control of a critical resource, or regulatory hurdles. In contrast, other market structures, such as perfect competition or oligopoly, are characterized by multiple suppliers or a few dominant players, which encourages competition and can lead to lower prices and innovations within the market.