Competition vs. Monopolies
In the American Economy, business is controlled by the government and the consumer. When a person is the owner of a business that is alone in its product that it provides for the consumer, it is said to be a monopoly. As a monopoly you have sole control over price. Monopolies are regulated by the government in order to prevent the misuse of power that a monopoly has.
If a person can only get turkey, for example from one store. Then the store can charge a lot more for that turkey than it could if the store next door was selling it too because then there would be competition. Also, the store would not have to produce a better quality of turkey because there would be no reason for it to do so. In this situation the consumer is taken unfair advantage of by the business owner, in this case the store.
Government regulates monopolies to promote a perfect competition economy and to get rid of the "turkey situation" discussed above. The benefits of a perfect competition economy benefit consumers. For example, if we go back to the store, in a perfect competition economy all of the stores have turkey. Now the stores want to make sure that the turkey that they sell is the best turkey and cost the least. In this situation they are competing for the consumer's business.
However, business owners of a monopoly situation disagree with the government. When there is a business that has the potential to become a Competition vs. Monopolies 2 monopoly the government watches it very closely and the business has to go through the government for mergers and such. The more the business becomes a monopoly, the more the government says no to the business's requests. For example, there is Microsoft. The government has been working to keep Microsoft from being the big business that it is today.
So, in conclusion, a perfect competition economy makes benefits for the consumer. Likewise, a monopolistic economy makes benefits for the business owner. On the flip side, a perfect competition shows drawbacks for the business owner and a monopolistic economy shows drawbacks for the consumer. The best way to run an economy is to have a balance between the two options. America's economy does this.
Perfect Competition, Monopoly, Monopolistic Competition and Oligopoly The subject of competition is an interesting one. The general idea in economics seems to be, the more competition the better. "Good competition" results in a greater likelihood in overall efficiency and low prices. There are several main types of competition, these include, perfect competition, the most competitive market possible (and, presumably, the one of greatest value to the consumer), monopoly, the least competitive
Instead, IBM began to falter after a series of product failures. As a result, many companies gained market share against IBM with some even over taking it; an efficient market took care of the issue. Yet, another example of why government should not interfere with market structures is the airline industry. After 1978, the airline industry was quickly transformed into an oligopoly market structure where only a half dozen or
In this case, the average total cost will continue to decline as the scale of production increase, because fixed (or overhead) costs are being spread over higher and higher levels of output" (Natural monopoly, 2010, Tutor2U). According to economic theory, it is efficient to allow for a natural monopoly because competition would require too large of a diversion of available resources for a competitor. When natural monopolies exist, they
Competition in these markets, therefore, is unlikely to be on the basis of product innovation. Service innovation is possible to some degree with the Internet, but there are only so many ways to deliver insurance -- it is a product centuries old and not subject to much innovation. In a market like this, service and price are two methods of gaining competitive advantage. Private insurance firms use proprietary actuarial
The OFT may then refer the companies to the Competition Commission (formerly known as Monopolies and Mergers Commission). The Competition Commission also plays a major role to investigate the situations which are called 'Oligopoly Situations' which involve explicit or implicit collusion between firms. Then the Competition Commission decides if the monopoly is acting against the public interest or not. And if they find a firm with a monopoly situation they
Monopoly Radical Treatise on Monopoly When a firm is the only seller or supplier of a good or a service for which there is no close substitute, it is referred to as a monopoly. Broadly speaking, every firm would naturally like to have a monopoly given that monopolies do not face competition. However, monopolists can only succeed in a market situation where the barriers to entry are very high (Brue & McConnell,
Our semester plans gives you unlimited, unrestricted access to our entire library of resources —writing tools, guides, example essays, tutorials, class notes, and more.
Get Started Now