monopolist

A monopolist is a firm that is the sole producer of a good or service in a market with no close substitutes. This gives it market power to influence the price and the quantity sold. Monopolists arise when barriers prevent entry by new firms. These barriers can be natural (high fixed costs, economies of scale), legal (patents, licenses, exclusive rights), strategic (network effects, control of a critical input), or a combination.

Because the monopolist faces the downward-sloping demand curve, it can set price above marginal cost. The optimal output is where marginal revenue equals marginal cost, and price is determined from the demand curve. This often leads to higher prices and lower output than in competitive markets, creating deadweight loss. Economists distinguish between profit-maximizing behavior in the short and long run; profits may persist due to barriers.

Natural monopolies occur when one firm can supply the entire market at lower cost than multiple firms, often in utilities. Regulation is common: price caps, rate-of-return regulation, or public ownership. Antitrust and other competition laws aim to prevent abusive practices, promote efficiency, or require divestitures or access to essential facilities.

In discourse, a monopolist refers to the single firm that holds monopoly power within a market segment, not necessarily implying a formal designation. Monopoly differs from oligopoly, where a few firms share market power.