Monopolies Essay

Many utilities are monopolies by having the entire market share in certain areas. With deregulation of these utilities, the market becomes open to competition for market share to begin. In terms of regulation of monopoly, the government attempts to prevent operations that are against the public interest, call anti-competitive practices. Likewise, oligopoly is a market condition where there are minimal distributors that have a major influence on prices and other market factors. This causes market failure, especially if evidence of collusive behavior by dominant businesses is found.

Monopolies are defined as an industry dominated by one corporation, or business, like standard oil. They are a main driver of inequality, as profits concentrate more on wealth in the hands of the few.(Atlantic). A monopoly has total or nearly all control of that industry. They are considered an extreme result of the U.S. free market capitalism. The business own everything, from the goods to the supplies to the infrastructure. This company will become big enough to buy out other competitors or even crush their competitor by lowering their prices to get the other business to go out of business. They will then control the whole industry without any restarted, having the prices be what they want and the product to be in what condition they want

Monopoly is a firm that is the sole seller of a product without close substitutes. A monopoly is caused by barriers to entry which means that there is only one seller in the market and no other firm can enter or compete with that sole seller. There are three main sources to barrier to entry, monopoly resources: a key resource required for production is owned by a single firm. Government regulation, which is the government gives a single firm the exclusive right to produce some good or service. Also the production process, which is a single firm can produce output at a lower cost than a large number of firms.

By definition a Monopoly is exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices (Monopoly 2012). Individuals are often time fearful of a company or industry becoming a monopoly because it would control too much of a market share, and do whatever wants; this includes raising prices, to using excess capital to branch into even more areas (Rise of monopolies 1996). The market structure of a monopoly is characterized by; a single seller; a unique product; and impossible entry into the market (Tucker 2011). A monopoly can be a difficult thing to accomplish being that a single seller faces an entire industry demand curve due to the fact it makes up the industry as a

Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3)

Horizontal refers to the idea of one firm joining with another at the same stage of the same production process. It also allows for greater market share; achieves economies of scale; and an opportunity to enter a different market segment. An example of this would be Ford’s takeover of Volvo - both being car manufacturers.

Horizontal mergers take place between companies in the same industry. These companies are rivals who sell the same goods or services. When a merger takes place, a rival is eliminated and potential for gains become higher. A vertical merger is one in which a firm or company combines with a supplier or distributor. For example, if a car making firm is receiving chassis from two suppliers and decides to acquire them, it is a vertical merger. On the other hand conglomerate mergers are those between firms that

AN example, in 2008, Hewlett Packet purchased Electronic Data Systems to enhance the services aspect of the partnering technology offerings (Yurko, 1996). Marketing networks now give companies much wider customer access including overnight services. One such merger is the Takeda Pharmaceutical Inc. Although distribution chains work great to increase the bottom line, these mergers are not well received by federal agencies like the Federal Trade Commission. The concern being monopolization which is when one company controls too much of a given industry. Another driver of mergers is a desire for a leadership change. Sometimes the owner of the high technology firms simply wants to sale out and has problems finding a successor within to take the helm. Hence, a merger holds an

Predatory pricing is an exclusionary act by which a firm, in order to create or maintain a monopoly power, lowers its prices below the profit maximizing level in order to push rival firms out of the market or prevent them from ever entering the market. In the long run, this results to be a detriment to consumers. Once the competition has left the market, the company can then raise prices to a supracompetitive level and recoup the losses suffered by predatory pricing. This results in higher prices for the consumer. With no alternative product available, the consumer is left with no choice but to pay the high price.

Monopolies have the potential to employ massive amounts of workers, and the potential to cause wide spread economic damage when they fail. Are these rewards worth the systemic risk to our economy, and every day life? American history is littered monopolies and large corporations that have caused, recessions, depressions, market crashes and economic uncertainty in the wake of their collapses. Monopolies also limit diversification to both consumers and to the marketplace in general, due to the nature that they would be the majority the market anyway. Monopolies also reduce competiveness and innovations in the economy. Regardless of the

An Oligopoly is similar to a monopoly in that there is restricted competition due to barriers to entry, but unlike monopoly there is competition. In Oligopolies there are just a few, very large firms, competing with similar or identical products.[3] Examples of oligopolies are oil companies and automobile manufactures. Unlike monopolies these firms have to take into account what the other firms will do and either adjust their prices in order to gain advantage over one another or collude with one another in order to become a monopoly (Oligopoly market Structure, 2007-2012). The latter being what most individuals fear when they think of monopoly; not allowing the market demand to set the price of goods coming to market, but instead limiting the supply in order to drive up the price of a product. The United States anti-trust laws are designed to limit firms’ ability to do this, but due to the amount of time it takes to prove such actions their effectiveness is limited. In the case of oligopolies the barriers to entry are what prevent firms from competing, and firms instead produce as much capacity as their infrastructure allows and set the price to clear the market. The more firms that compete, the more likely the aggregate welfare of the economy is to be satisfied, and the less likely that one firm can affect the whole industry.

Today there are many well-known monopolies that are found in the U.S. economy, however, the invention of railroads in the nineteenth century was considered the first monopoly. Railroads were considered a monopoly because they held superiority over traveling by wagon because railroads were able to they were able to transport people and goods quicker than traveling by wagon. In 1890, the Sherman Antitrust Act was passed to stop monopolies and to promote trade. Pure monopolies are generally a thing of the past because the U.S. prohibits monopolies today. Many approximate monopolies in today’s economy include telephone industries like Verizon and AT&T. Other monopolies include national retail corporations like Walmart and Target. The word monopoly

Companies do not have the freedom to merge and acquire as they please do. All have to meet the requirements and essentially be approved by regulatory bodies. In the context of regulations, antitrust laws and security laws are commonly referred to by regulator to determine whether a merger or acquisition should be allowed or rejected. Antitrust laws prohibit mergers and acquisitions that impede competition. The point is very simple where antitrust is referred to as competition. The goal is to increase competition because more competition in economics means that consumers get more at a fairer or lower price. Anytime a regulator believes that a merger or acquisition will make an industry or market less competitive, the business transaction might

Mergers of corporations take a lot of time, consideration, team work, and cohesiveness with team members and groups. Conflict and confrontations will surely arise, but it is up to those in management to learn how to deal with and make sure that everyone and everything operate effectively and orderly.

A monopoly can be seen as a form of market failure and this is because unlike in perfect competition, firms with large market power have the ability to inflate their prices as they are usually the ‘price-makers’. The price at which something will be sold is usually determined by the interaction of the supply and demand within the market.