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hi there in this topic video we're going to focus on monopolies in markets monopolies is the most highly concentrated of the market structures and then this introductory video we'll look at some examples of monopoly power in different industries so there's various types of monopolies various definitions we can focus on pure monopolies is an example of a market structure with only one firm and the firm is protected from competition by significant barriers to entry the London Underground takes is close to a pure monopoly effectiveness and natural monopoly but of course there is some competition from other forms of transport a working monopoly is a firm with at least 25 percent of the market so it does have some monopoly power and it's actually the legal definition of a monopoly used in the UK but typically a working monopoly operates within an oligopoly there may be some other bigger firms as well as a cluster of smaller firms competing for market share sometimes we have a competitive oligopoly in markets so for example cost of coffee and Starbucks or the two leading chains of coffee stores occasionally we have for example a duopoly which is where two firms dominate the industry and a good example of that is Pepsi and Coca Cola so in terms of definitions a pure monopoly is a single seller that dominates the entire market which is a member and the market has effectively 100% concentration while hugging it close to this Google in terms of web search in the UK has had a pretty much near monopoly for many years although noticed that its share of the search engine market in the UK has started to diminish a little bit in the early months of 2016 but it's smoggy share is well over 85% and has been for a long time in reality the competition of Markets Authority that's the body that's the main competition authority in Britain they define a working monopoly as any firm with greater than 25 end of an industry's total sales here's an example of a working monopoly in the mobile handset business in the UK Samsung is the leading band in mobile handsets with just over 31% of the market Apple is second Nokia third if we add together the five firm concentration ratio for this market we find it's over 84% so it's clearly an oligopoly but one firm has more than 30% of the market nearly a third of the market here's another good example of an industry where there's lots of monopoly power this is the change in global market share held by the major personal computer vendors from 2006 to 2015 hewlett-packard is a significant player although its market share has been relatively stable in recent times notice the rapid growth to prominence of the Chinese business lenovo Dells market share has remained above 10% Asus market share has declined Apple share isn't according to this measure but effectively the top firms have increased their dominance of the market whereas in 2006 nearly half the market was in the hands of other firms in 2015 only 27% was in the hands of the other thirds so the market has become more concentrated a dominant firm is defined as a market a firm sorry that has at least 40% of their given market let's Pattullo again a working monopoly has at least 25% of their market a dominant firm has at least 40% of the industry here's an example of a dominant firm coca-cola in the Mott in the United States has a 42% plus market share now just how stable that position is over the last 10 years we take for example a bee InBev one of the world's biggest brewing companies they have a market share of more than 40% in quite a number of companies or countries more than 78% in Argentina nearly 70% in Brazil more than half the market in South Korea Mexico and Belgium and the United States in Canada their market share is significantly above 40 percent less so of course in the UK less than 20% so here's a good example maybe in Burma business that has real genuine dominant market power in a number of important markets let's look at the market for internet browsers this chart shows the global market share by internet browser from 2012 through to the spring of 2015 and we can see the rise of Chrome is an operating operating browser the decline of Internet Explorer and the growth of Safari but effectively this is a good example of Chrome now having a market share of more than 40% oftentimes businesses of course can grow very quickly and achieve market power quite rapidly this chart shows the annual growth the year-on-year growth of the revenues of Amazon and eBay and Anil every year the revenue growth is double-digit rapid growth can often lead to monopoly power quite quickly so we define a working monopoly as any film with more than 25 percent of market share a dominant firm with at least 40 percent of their market but in reality it's quite important to note that any firm which has some market power and can set its own choices it's operating the imperfectly competitive market and will face a downward sloping demand curve you don't have to be a monopoly to be able to choose and set your own prices this is a good example of scale and market power so in the Express and courier service market globally the giant US firm UPS has nearly 20% and FedEx isn't that far behind Deutsche Post DHL is the biggest european firm v film concentration ratio is 51 percent not quite enough for an oligopoly but keep in mind that these are scale businesses these are huge organizations with big revenues and big profits they've got market power even if they don't necessarily satisfy the precise definition of the term Chinese firms are starting to increase in prominence in lots of different industries from telecommunications to the web Alibaba etc to computers and there's a little known market the wind turbine industry it showed the global market share of the world's biggest wind turbine manufacturers in 2014 why firm concentration ratio is lower than 50% there are quite a few players in the market but you would expect that concentration ratio to increase over time as dominant players emerge and through a process of merger and acquisition but note that already one two three four five six seven eight of the leading firms are Chinese China is developing a comparative and a competitive advantage in the wind turbine manufacturing sector let's look at the European market for cars passenger cars rather than light vehicles and valence will have you Volkswagen much of the news recently putting you with the carbon emissions scandal Volkswagen satisfies the criteria for being called in working monopoly in 2014 they had just over 25 percent of the European car market based on new registrations new vehicles and other firms were tucking in behind the top five firms have more than 60 percent but here's a good example of a working monopoly inside an oligopoly the definition of monopoly is contingent on the scale and the scope of the market were looking at and this is a really important evaluation point particularly in the data response question so what monopoly power is depends in part on how we actually define the scope and the size of the market are we looking at the market from a global point of view Motor Vehicles wind turbines are we looking it for a national point of view coffee shops a regional point of view regional water monopolies for example or even no local monopolies now there might only be one pub or one bank or one post office or petrol station in a local area that's really quite important postal services for example that's a big industry we might break it down and look for example at letters and parcels there's probably more competition in parcels than there is in letters if we look at the B range to the perm integer we're looking at the rural area well often the local monopolies or we're looking at urban areas towns and cities when there's often a lot of choice even on the same street monopoly power depends on how you define the market and that's the key takeaway point from this slide so in this introductory video we've introduced the idea of monopoly power and looked at lots of examples of market share to see firms that are monopolists but of course there are different definitions of what a monopoly is will leave the cost in the revenue analysis diagrams for a separate video so be sure to check out the YouTube channel for that one thanks a lot for joining in on this revision video