Question

Why is there no competition in a monopoly?

Answer 1

In economics monopoly and competition signify certain complex relations among firms in an industry. A monopoly implies an exclusive possession of a market by a supplier of a product or a service for which there is no substitute.

Think of it as an Airline that has an exclusive route from x to y. They can charge whatever they want since there is no other carrier flying that route. Air Canada is famous for that. Let's say three Airlines fly from point x to point y.

Let's also assume that Alaska Airline (or any other of your choosing) has the same route but Alaska Airline is cheaper. Air Canada will undercut these prices at a great loss to get rid of the competition and immediately raises the prices.

Answer 2

There is no competition due to the monopoly is a market structure where there is a single provider of a certain good or service. That means that a single company dominates the entire supply market. In this way, consumers who wish to acquire a good can only go to the monopolist and they must accept the conditions that this imposes. In economics this is the best example of an "imperfect competition".

This answer is based on the article: "Definition of Monopoly" publish by The Economic Times.