Monopoly in Wadenswil

In Wadenswil, a business that is the closest to a pure monopoly is the Wadi-Taxi service, which is the only firm providing a cab service in this town. A pure monopoly has the characteristics of being the single seller of the product, the price-maker, there is no substitute, there is blocked entry to the market, and there is a non-price competition. The taxi service is the single-seller that offers a cab service in Wadenswil, and therefore has no immediate competitors, meaning the entry is also restricted. The final characteristic making the Wadi-Taxi firm a monopoly is that it engages in non-price competition, as people needing a taxi in Wadenswil only have that one choice. The firm, however, is not a pure monopoly which rarely exist in the real world. For a monopoly to be pure, no close substitutes can exist that consumers would buy when the monopolistic firm raises its prices too high. However, a substitute for taking a taxi is the public transport offered in Wadenswill, which usual consumers of taxis would be attracted to should the price determined by Wadi-Taxi increase by a lot. The firm Wadi-Taxi is also not completely the price-maker of taxi fares. Firms providing taxi services in neighboring towns will set their price at a certain level, and if Wadi-Taxi should go much above this price, people from Wadenswil will begin to call taxi services from towns close by. In conclusion, the Wadi-Taxi firm is a monopoly within Wadenswil, yet its monopolistic power is restricted by the taxi services from other towns, which all together determine the market price.