The Concept of Monopoly and the Measurement of Monopoly Power

Monopoly, says the dictionary, is the exclusive right of a person, corporation or state to sell a particular commodity. Economic science, investigating the economic aspects of this legal right, found that they all resolved themselves into the implications of the power of the monopolist — as distinguished from a seller in a competitive market — arbitrarily to decide the price of the commodity, leaving it to the buyers to decide how much they will buy at that price, or, alternatively, to decide the quantity he will sell, by so fixing the price as to induce buyers to purchase just this quantity. Technically this is expressed by saying that the monopolist is confronted with a falling demand curve for his product or that the elasticity of demand for his product is less than infinity, while the seller in a purely2 competitive market has a horizontal demand curve or the elasticity of demand for his product is equal to infinity.