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 Form 3 Business Studies lessons on product markets

Sources of monopoly power.

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Answer Text:
Sources of monopoly power.
(i) Control of a factor of production, for example, Magadi Soda for production and supply of soda ash.
(ii) Legal protection through patent rights and copyrights.
(iii) Merging or amalgamation of firms producing a similar product to control the market.
(iv) Government owned or controlled enterprise to eliminate wasteful competition.
(v) Where the production requires heavy capital investment not affordable by many firms e.g. railway construction.
(vi) Where there exist substantial economies of scale which can only be tapped through one very large enterprise.


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