Running Head: FORMS OF INDUSTRIAL ORGANIZATION Forms of Industrial Organization MBA 501 November 15, 2008 John Green, Ph.D. Introduction Forms of Industrial Organization Oligopoly Pure Monopoly Pure monopoly exists when a single firm is the sole producer of a product for which there are no close substitutes” (McConnell & Brue, 2004, p. 438). There are several main characteristics of a pure monopoly: single seller, no close substitutes, blocked entry, price maker, and non-price competition. Single seller refers to the monopoly as the sole producer of a product, or sole processor or service. In this case the industry and the firm are one, they are synonymous. With no close substitutes, a monopoly produces unique products, which no other company can compare to. There are several factors which lead to barriers to entry, which are inherent in a monopoly. These factors can include economies of scale, legal, such as, licenses, patents, and ownership or control of resources. Monopolists are known as price makers. They have the power to set pricing and change pricing at their will, whenever it poses as an advantage. Not only does a monopolist have the power to control pricing, but, also the quantity of product supplied or produced. However, monopolists do not engage in price competition, they focus on product differences, non-price competitions. A monopolist goal is to maximize profit (McConnell & Brue, 2004, p. 438-441). An example of a company which has monopolist features is Microsoft. “As a matter of legal and economic fact, Microsoft is at least ‘monopolistic’. It has such a commanding share of the operating systems market that it can, in many respects, behave like a monopoly” (para. 10, “Is Microsoft”, 2008). Microsoft’s market share is so large it controls approximately 90% of the market (para. 5, “Is Microsoft”, 2008). In addition, Microsoft’s available programs were not able to be integrated into other companies programs. As a result, in 1999,...