What's the difference between a monopoly and a competitive market?

In economics, a monopoly refers to a situation where there is only one seller in the market, and there are no close substitutes for the product or service that the seller provides. This means that the seller has complete control over the price and quantity of the product or service, and can charge higher prices than in a competitive market. On the other hand, a competitive market is a situation where there are many sellers and buyers in the market, and no single seller or buyer can influence the price of the product or service.

One of the key differences between a monopoly and a competitive market is the degree of market power. In a monopoly, the seller has a significant degree of market power and can dictate the terms of trade, while in a competitive market, no single seller or buyer has the power to influence the market price. As a result, a monopolist can charge a higher price and produce less output than in a competitive market, which can result in allocative inefficiency.

Another key difference between a monopoly and a competitive market is the presence of barriers to entry. In a monopoly, the seller may have exclusive control over some resource or technology, which makes it difficult for new firms to enter the market. This can result in higher prices, lower output, and reduced consumer surplus. In contrast, a competitive market has low barriers to entry, which means that new firms can enter the market and compete on price, quality, and other factors.