(i) A monopolist can charge different prices in different markets due to product differentiation which leads to lack of perfect knowledge. Buyers and sellers do not have perfect knowledge about the market conditions. Selling costs create artificial superiority in the minds of the consumers and it becomes very difficult for a consumer to evaluate different products available in the market. As a result, a particular product (although highly priced) is preferred by the consumers even if other less priced products are of same quality.

(ii) 1. One seller but large number of buyers : In the monopoly market, there is only one seller but large number of buyers. This single seller may be in the form of an individual owner or a partnership or a joint stock company. Being the only seller, a monopolist faces no competition from other firms.

Not only that there is no difference between firm and industry in this form of market structure. Because of this the market demand curve is also the demand curve for monopolist. But the number of buyers is large in this market. An individual buyer has no influence on the market price. The buyers have no option but to purchase the commodity from the monopolist or go without the product.

2. No close substitute : In the monopoly market, monopolist produces goods that have no close substitutes. This is an essential condition for a firm to be called monopolistic. The goods which can be easily used for each other and are available at nearly the same price are called close substitutes.

If there are some other firms which are producing close substitutes for the product in question there will be competition between them and then the firm cannot be said to have monopoly. Due to this particular feature, cross elasticity of demand between the product of the monopolist and the product of any other producer must be nil or very small.

3. Strong barriers to the entry of new firm : Another important feature of the monopoly market is that there are. barriers or restrictions on the entry of new firms on the market. The barriers which prevent the firms to enter the industry may be economic in nature or else of institutional and artificial in nature. These restrictions may take several forms such as patent rights, copy rights, government laws and economies of scale.