Teacher Date Key characteristics of a monopoly. A monopoly is a market situation in which one seller has control over a product such that he is able to deny access to competing firms in the market through his actions. Another basis for monopoly could be restrictions on the production of a certain commodity by the government. The absence of competition enables a monopolizing firm to control prices in a market, but prices have to be set in such a way that can still prevent the entry of new firms in the market. Another characteristic of a monopoly is lack of innovation due to the fact that there is no pressure from competing firms. Lack of competition is another major characteristic of monopoly as there are no competitor firms present in the market. The threat of legal sanctions is also a present feature in a monopoly as these are put in place by the government to prevent abuse of power by the monopolizing firm. The demand curve of a monopolist sloped downward from left to right. (Clayton, Gary. 2001) What are legal barriers to entry? Barriers to entry have the intention of limiting potential entrants from entering a market. They aim to protect a monopolizing firm’s presence in an industry so that it can continue to earn profits. Examples of such barriers to entry include: patents which give the firm a legal justification to produce a product exclusi…