Principles of Economics by Carl Menger Chapter 5.2D - Principles of Monopoly Trade

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How do monopolists strategically set prices and control supply to maximize profits? In this video, we dive into Carl Menger’s Principles of Economics, Chapter 5.2D: The Principles of Monopoly Trade (Monopolist Strategy).
Monopolists may seem all-powerful, but they still face clear economic limits. They can’t simply set any price and expect unlimited sales. Trade, even monopoly trade, must still benefit both sides—buyers must see value in the deal.
Menger explains that a monopolist can control either:
✅ The quantity of goods offered
OR
✅ The price per unit—
but not both at once. If they want to sell more, they must lower the price. If they want to maintain a high price, they must limit how much they sell.
A clever monopolist seeks to maximize total revenue—not sales volume or market fairness. That’s why they might:
🔸 Sell first to wealthy buyers at high prices
🔸 Lower prices later to reach new markets
🔸 Even destroy supply to prevent price drops—just as the Dutch East India Company once did with spices.
This behavior follows strict economic laws, not greed or randomness. History shows that when monopolists lose the ability to control supply (like after industrialization), their influence fades.
In short: Monopoly pricing is a careful balancing act. The goal is simple—maximum profit. Menger’s insights still explain real-world markets today.

❓ Questions This Video Answers:
-How do monopolists decide between controlling price or quantity?
-Why can’t a monopolist control both price and quantity at once?
-What is the goal of a monopolist’s strategy?
-Why do monopolists sometimes limit supply on purpose?
-How does monopoly trade still follow economic laws?
-What is the impact of lowering prices on total revenue?
-Why do monopolists target wealthier buyers first?
-What historical examples show monopolist behavior?
-What happens when monopolists lose control over supply?
-Why is maximizing sales volume not always optimal?

00:00 - Introduction to the Principles of Monopoly Trade
00:12 - How Monopolists Influence Trade
01:48 - Lessons from History and Economic Laws
02:46 - Outro

#MonopolyStrategy #ProfitMaximization #CarlMenger