What distinguishes a pure monopoly from a perfectly competitive firm?
A pure monopoly exists when a firm is producing a good with no close substitutes and there are barriers to entry. This is the complete opposite of a perfectly competitive firm, which produces goods with identical substitutes, and where there are no barriers to entry. The central difference is the barriers to entry. In reality, both of these forms of market organization are rather rare but provide a useful model and comparison for evaluating more realistic market structures. 2. Are all barriers to entry legal restrictions? No. Legal barriers to entry include government franchises and patents. But there are other factors that prevent competitors from entering a market. Some of these factors are very high fixed costs of production and sole ownership of a resource. 3. How do market and firm demand curves differ for monopolists? The firm and market demand curves are identical for a monopolist. As opposed to perfectly competitive firms, which have flat demand curves and downward-sloping mark
