Monopolies and Competition

Forms of competition

Price taker

A firm that has to accept the market price

Price maker

A firm that can influence the price. This ability comes from:

Resource control
Government regulations (e.g. patents)
Economies of scale (high fixed costs, low marginal costs)
Network economies (lots of users like Ebay)

The government tries to regulate competition and break up concentration of power, in order to protect consumers, while not restricting economies of scale.