Imperfect Competition - Monopoly

In a pure monopoly only one company exists in the market. There are very few examples of such a market. Be careful not to get confused between pure monopoly and legal monopoly (which is owning 25% of the market). In Wales it could be said that Dŵr Cymru is a monopoly as most of the Welsh population do not have the option of getting their water supply from other companies.

A monopoly is a company that can determine and control the price. In theory they can set whatever price they choose, and the customer will have to pay. In reality, the company's activities are supervised by the Regulator, which in this case is Ofwat. Ofwat will ensure that the prices customers pay are fair.