Student’s Name
Institutional Affiliation
Monopoly and USPS Operation
One of the most common and persistent monopoly firms I have used their service recently is the United States Postal Service. Therefore, I selected to discuss the firm as the monopoly to use in exploring the monopolistic market. The key reason why I classified United States Postal Service as a monopoly is because it is the sole producer and supplier of public postal service in the United States. The company has been providing this service for a long time, and has no competitors. As a result, the firm operates the market with full dominance in the country.
Another reason is that the firm sets its own price and determines the quantity that will clear the market demand. This is because the prices of sending mails and parcels through the company are not determined by the price mechanisms. Instead, the firm sets its own price. Therefore, to sell more services, the firm will reduce prices, thereby facing a unique demand curve (Mankiw, 2014). Another reason for classifying the firm as a monopoly is because the entry of the market by other players is regulated by the law, as other layers are unable to enter the market.
The United States Postal Service operates as a price maker in the market. This works for the firm relative to the characteristic of lacking demand and supply as the forces for setting prices. In addition, the United States Postal Service operates as the sole provider of public postal services in the country. This is relative to the characteristic of the market being constrained to new entrants. Moreover, the United States Postal Service operates as a profit maximizer since it sets its price in the market as relative to the characteristic of being a price maker.
References
Mankiw, N. (2014). Principles of Microeconomics. New York: Cengage Learning