Parking Economics Essay Example | Topics and Well Written Essays - 500 words

Parking Economics - Essay ExampleLegal barriers restrict competition through methods such as patents or copyrights, public franchise and government licenses (Duffy 119).Price discrimination and a single terms markets are the two main price strategies utilized in monopolies. For most monopolies, low prices facilitate larger output therefore, single price strategy is cost-effective in determining output and price. Single price monopoly involves interchange its entire output unit at similar prices to all customers. This strategy builds on the flux in look at for goods. In an elastic environment, single price monopoly works best by increasing the intersection of a unit and reducing the selling price thereby, increasing marginal gross that translates to profits. However, in a rigid demand market setting, fall of price in the output translates to decrease in total revenue. In such markets, monopolies reduce the number of units produced and sum up the price of each unit. This will dec rease the total cost but increase the income profits (Duffy 120).In a perfect competition market, equilibrium occurs when the demand is equal to supply in regard to unit quantity and price. On the other hand, equilibrium in a single price monopoly markets occurs when the marginal revenue and the marginal cost are equal. Monopoly equilibrium relies on a higher price smaller output strategy. Perfect market competition is more efficient than a monopoly market because the marginal friendly benefits and the marginal social costs are equal. This equilibrium describes the maximization of consumer surplus and producer surplus hence production of efficient output. Firms that run a monopoly are not able to get maximum outputs from the available inputs. In summary, marginal social benefit exceeds marginal social cost leading to dead weight loss. However, this discrepancy can be averted through rent seeking which is the process of redirecting the surplus from a