Unfettered by competition the monopolist knows impact of any pricing decision has a negligible effect on competitors because there are none. The monopolist can pursue economic profit maximization. The demand curve faced by the only seller is the same as the market demand curve. Unfettered by competition the monopolist knows impact of any pricing decision has a negligible effect on competitors there are none. The monopolist can pursue pure profit maximizing strategy.
Monopoly is mitigated only by competition from substitutes.
The firm is able to choose the price-quantity combination to maximize its profits. The monopolist producer tends equates marginal revenue and marginal cost rather than price equal to marginal cost. In theory the monopolist is considered inefficient because the quantity supplied is less and the price higher than under perfect competition. The inverse of a monopoly or monopsony can also exist, i.e. market power exercised by a single buyer facing many producers. Monopoly exist for one or more of four reasons.