What factors may give rise to monopoly power in an economy?

Give factors that may give rise to monopoly power in an economy.

(i) Where there exists substantial economies of scale which can only be tapped by one very large enterprise.
(ii) Where the production requires heavy capital investment not affordable by many firms.
(iii) Merging or amalgamation of firms producing similar products to control the market.
(iv) Legal production through patents and copyrights.
(v) Control of important factor of production.
vi) Where transportation costs are large the relevant market may be limited geographically if
there is only one firm in such a locality. There may be no or very limited competition.
vii) In case where cost of production per unit of output declines (decreasing cost of
production or increasing returns to scale) entry into industry becomes very difficult,
thereby permitting the firms already established to exercise natural monopoly.
viii) Government owned or controlled enterprises to eliminate wasteful competition. Some monopolies are created by the government or run by the government. The Kenyan
government, for example, has given the Kenya Power and Lighting Company the
exclusive right to generate and distribute electricity in the country. Patent rights given to
some investors grant them monopoly over their invention over specified period of time.

---

maurice.mutuku answered the question on July 11, 2017 at 07:27

Exams With Marking Schemes

• Grade 1
• Grade 2
• Grade 3
• Grade 4
• Grade 5
• Grade 6
• Grade 7
• Grade 8
• Grade 9
• PP1
• PP2
• Playgroup
• Form 1
• Form 2
• Form 3
• Form 4

Related Questions

• What factors compromise a negative internal environment in a business? (Solved)
  

  Highlight factors that compromise a negative internal environment in a business.

  Date posted: July 11, 2017 .    Answers (1)

• In what ways can the local resources be managed to alleviate unemployment problems in Kenya? (Solved)
  

  list ways in which the local resources can be managed to alleviate unemployment problems in Kenya.

  Date posted: July 11, 2017 .    Answers (1)

• In what ways can the problem of scarce resources be addressed by a consumer? (Solved)
  

  Give ways in which the problem of scarce resources can be addressed by a consumer.

  Date posted: July 11, 2017 .    Answers (1)

• What factors determine the National income of a country? (Solved)
  

  Give factors that determine the National income of a country.

  Date posted: July 11, 2017 .    Answers (1)

• What commercial services facilitate trade? (Solved)
  

  Give commercial services that facilitate trade.

  Date posted: July 11, 2017 .    Answers (1)

• What costs are incurred by intermediaries in the chain of distribution? (Solved)
  

  Highlight the costs incurred by intermediaries in the chain of distribution.

  Date posted: July 11, 2017 .    Answers (1)

• Under what circumstances can air transport be preferred to transport goods from one place to another? (Solved)
  

  Give circumstances under which air transport can be preferred to transport goods from one place to another.

  Date posted: July 11, 2017 .    Answers (1)

• In what ways can the government use to influence the supply of maize in Kenya? (Solved)
  

  Give ways in which the government can use to influence the supply of maize in Kenya.

  Date posted: July 10, 2017 .    Answers (1)

• What are the features and characteristics of chain stores? (Solved)
  

  What are the features and characteristics of chain stores?

  Date posted: July 8, 2017 .    Answers (1)

• What are the features of trade credit as a source of finance for business units? (Solved)
  

  Give the features of trade credit as a source of finance for business units.

  Date posted: July 7, 2017 .    Answers (1)

• Why may a multinational company prefer setting up a production unit in developing country instead of exporting finished goods to the country? (Solved)
  

  Highlight the reasons why a multinational company may prefer setting up a production unit in a developing country instead of exporting finished goods to the country.

  Date posted: July 7, 2017 .    Answers (1)

• Why should a consumer satisfy basic wants before secondary wants? (Solved)
  

  Give reasons why a consumer should satisfy basic wants before secondary wants.

  Date posted: July 7, 2017 .    Answers (1)

• What are the advantages of after sales services as a method of sales promotion to a customer? (Solved)
  

  Give the advantages of after sales services as a method of sales promotion to a customer.

  Date posted: July 7, 2017 .    Answers (1)

• What benefits would accrue to a country as a result of delocalization? (Solved)
  

  Give the benefits that would accrue to a country as a result of delocalization.

  Date posted: July 6, 2017 .    Answers (1)

• What problems may a country encounter when measuring national income using the output approach? (Solved)
  

  Discuss the problems that a country may encounter when measuring national income using the output approach.

  Date posted: July 6, 2017 .    Answers (1)

• What are the differences between a private limited company and partnership forms of Business units? (Solved)
  

  Describe the differences between a private limited company and a partnership forms of Business units.

  Date posted: July 6, 2017 .    Answers (1)

• What are the benefits of direct production? (Solved)
  

  Explain the benefits of direct production.

  Date posted: July 6, 2017 .    Answers (1)

• Why do many governments discourage localization of firms? (Solved)
  

  Give reasons why many governments discourage localization of firms.

  Date posted: July 5, 2017 .    Answers (1)

• What are the limitations of a siren as a means of communication? (Solved)
  

  Give the limitations of a siren as a means of communication.

  Date posted: July 5, 2017 .    Answers (1)

• Why do consumers need protection from unscrupulous traders? (Solved)
  

  Give reasons why consumers need protection from unscrupulous traders.

  Date posted: July 5, 2017 .    Answers (1)