This is a long post, but I wanted to share my thoughts and ideas with you.
I’ve written about this issue before, and I also know a lot of people who are dealing with it.
The idea is that the market supply curve is a line that goes from the top left of the graph to the bottom right. The demand curve is a line that goes from the bottom left of the graph to the top right. When the two curves are equal, there is no market. In a perfect market we would have no competition, so that the demand curve would be vertical and the supply curve horizontal.
If demand and supply curves are equal then the world is a perfect market. In a monopoly market there is no competition, so the two curves are horizontal. In a perfect market, demand and supply curves would be parallel, so the market is a perfect monopoly.
We would like to believe that in a perfect market, there would be no competition, so the two curves would be horizontal. In a perfect market, we would have no competition, so the demand curve would be vertical and the supply curve horizontal.
But there’s a lot more to this story than that. I’m going to be brief. So a monopoly market is a market where there is no competition between buyers. The demand curve is horizontal, and the supply curve is vertical. And the buyers are people. So the buyers are competitors. In a monopoly market, they buy cheap stuff. In a perfect market, they would buy low-priced stuff.
We can make a lot of sense of this. A monopoly market has no competition (hence no price war), so the supply curve is horizontal. So the demand curve is vertical. And the buyers are the same people as before. So the demand curve is not changing. But because there is no competition, we have a horizontal supply curve. The demand curve isn’t changing either because the price is still going up. So we would be perfectly content with a market with no supply at all.
This is a market that is characterized by monopoly, so the demand curve would be vertical. Because the sellers are all the same, we can say that the demand curve is horizontal. The price is still going up, but now the market is in dynamic equilibrium where people are willing to buy whatever price is lowest. There is no shortage of cheap stuff in this market. The supply curve is also horizontal. So the price is still going up. The market is in dynamic equilibrium.
Markets with monopoly have the supply curve going up and the demand curve going down. So the price is going up for the rest of the market too. This is a monopoly market.
In a monopoly market the demand curve is horizontal. So there is no shortage of cheap stuff. The supply curve is horizontal. So there is no shortage of anything. That’s the point.
