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Oligopoly is a market structure characterized byindependence in decision making uncertainty about the behavior of rival firms substantial diseconomies of scale a large number of small firms A monopolist or an imperfectly competitive firm practices price discrimination primarily toincrease profits expand plant size lower total costs reduce marginal costs Public policies toward monopoly in the United States consists oflaws outlawing all of them regulation of natural monopolies government takeover if monopoly profit exceeds a certain levelforcing monopoly industries to become perfectly competitive In monopoly: because P > MC, a basic condition for efficiency is violated consumers are confronted with a price that is lower than marginal cost consumers will consume more of the good than is economically efficient all
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