The essence of a monopolistic market structure is that a single firm dominates the entire market for a particular product or service. This firm holds significant market power, allowing it to set prices and control the supply of its goods. An essential characteristic of the products sold by a monopoly is that they are uniquely produced with no close substitutes. This means that consumers cannot find similar products from other providers, making the monopolist the sole source of that specific good or service.
Without close substitutes, the monopolist faces a relatively inelastic demand curve, as consumers have no alternatives to turn to if they are dissatisfied with the price or quality of the monopoly's product. Consequently, this lack of substitutes reinforces the monopolist's ability to influence market prices significantly and manage its supply without competition.
In contrast, products that are highly differentiated, identical to those of competitors, or priced below market value do not accurately characterize the unique position of a monopoly in the market. These aspects pertain more to competitive market structures or may reflect temporary pricing strategies rather than the fundamental nature of a monopoly's product offering. Thus, the uniqueness and absence of alternatives fundamentally define the monopoly's market power and product characteristics.