კონფერენცია

∘ Merab Julakidze ∘
ANATOMY OF MONOPOLY POWER

Abstract

In a monopoly, the firm controls the entire market and is aware of the demand curve for its products. It uses this information to determine the optimal production level, which in turn sets the price. However, in a perfectly competitive market, the individual decisions of firms regarding production levels have no impact on the overall market. The research focuses on the monopolist's decision regarding the production level, and it demonstrates that the monopolist can establish either the price or the production level, but not both simultaneously. Generally, it is presumed that a monopolist selects the production level with the goal of maximizing profit, and the market price is then determined accordingly.

Key words: Monopoly power, Equilibrium under monopoly, Game theory, Lerner index, Price discrimination.

Ivane Javakhishvili Tbilisi State University Paata Gugushvili Institute of Economics International Scientific C O N F E R E N C E S "ECONOMY – XXI CENTURY"

E ISSN 2587 - 4691	∘ Merab Julakidze ∘ ANATOMY OF MONOPOLY POWER Abstract In a monopoly, the firm controls the entire market and is aware of the demand curve for its products. It uses this information to determine the optimal production level, which in turn sets the price. However, in a perfectly competitive market, the individual decisions of firms regarding production levels have no impact on the overall market. The research focuses on the monopolist's decision regarding the production level, and it demonstrates that the monopolist can establish either the price or the production level, but not both simultaneously. Generally, it is presumed that a monopolist selects the production level with the goal of maximizing profit, and the market price is then determined accordingly. *Key words:* Monopoly power, Equilibrium under monopoly, Game theory, Lerner index, Price discrimination.