Almost every witch and wizard in Britain, upon being accepted at
Hogwarts, buys their first wand at Ollivander's. Wandering up and
down Diagon Alley, there is no other wand maker available that is known to offer an equal quality of wands. However, this may easily be defined as Ollivander's being the single seller in a monopoly market. From an economic point of view, this is potentially problematic.

As Ollivander's is a monopoly firm, its service may easily be described as being very effective and efficient. While the actual process of finding one's wands may last a relatively long time, there is hardly a witch or wizard in Britain who did not get their wand from Ollivander's. In the course of its long history, Ollivander's has managed to adhance the wands offered and is hence the prime address for anyone looking for a wand.

Having a monopoly will lead to Mr. Ollivander having massive profits while at the same time guaranteeing a stability of prices. All Ollivander wands are said to be sold for as little as seven Galleons apiece. As there is no competition in the form of wands of a similar quality that are offered for much cheaper prices, it is easily seen that there is no need for Ollivander's prices to change. While not using these profits to develop other products, it may be assumed that they are used for further research, establishing Ollivander's standing as the sole maker of the finest wands in Britain.

However, this may easily lead to an exploitation of consumers due to higher prices. As there is no real alternative to an Ollivander's wand, Mr. Ollivander is able to chose the price of his work without any fear of losing potential customers. There are no known numbers with respect to the costs that occur producing it. Hence it is impossible to actually define Ollivander's win span. Considering the differences in the costs of purchasing different material, such as for example a phoenix feather or a unicorn hair, vary greatly, it is astounding that the prices of the wands remain the same nonetheless. To be profitable even when selling only the most expensive wands, the win span of Ollivander's must be immense.

It may also be possible that some price discrimination takes place. As there is always only one customer at once, it is impossible to say whether all wands are actually sold for the same price. It is said that everyone has to pay seven Galleons, but who is to say that there will never be an additional price for some customers due to "special ingredients" or some other fishy excuse. Whereas no case of that is known to me personally, it is always a possibility.

Ollivander's having the monopoly on wands may also lead to further problems: Ollivander's is said to only use three different types of wand cores, namely dragon heart string, phoenix feathers and unicorn hairs. While these cores tend to work with most customers, there are some people who will not be able to work with either of those to the best of their abilities. As there is no alternative wand shop, this leads to major complications in starting their wizarding education, as it is hard to actually find a wand somewhere else, outside of Britain. I experienced this problem myself...

To be researched:

1. Have there ever been other wand makers in Britain? If yes, why don't they exist anymore?
2. What about other countries? Is there a monopoly on making wands everywhere? If not, why here?
3. Are there some ministry regulations that allow Ollivander's to hold that monopoly for such a long time?
   

Sources / Further Reading: http://hubpages.com/business/Advantages-And-Disadvantages-Of-A-Monopoly-Market