Elements of Numerical Mathematical Economics with Excel

6.12. Markets with high-entry barriers: monopoly and the Cournot duopoly model

In the previous Sections 6.10 and 6.11, we have analyzed how the firms behave in competitive markets with low-entry barriers.

We now turn the attention to the following two competitive markets with high-entry barriers.

1. • Monopoly.
2. • Oligopoly (as analyzed in the classical Cournot Duopoly Model).

Monopoly

The monopoly is characterized by the following points:

1. • single seller;
2. • no goods substitutes;
3. • high barriers to entry (e.g., legal, economic, capital requirement barriers, etc.).
4. • downward sloping demand, as in the monopolistic market.

In the monopoly we have the same objective function to maximize, as in the monopolistic market:

max ...