The Effects Of Monopolies On The Economy Essay

Monopolies and oligopolies often use anti-competitive practices, which can have a negative impact on the economy. This is why company mergers are often examined closely by government regulators to avoid reducing competition in an industry.

The American business giants of the Gilded Age were captains of industry. The men and women who lived in this time period took risks in search of wealth. Some entrepreneurs didn’t earn that wealth in a good way. However, they did what they needed to pursue their dreams. Some became very successful, creating monopolies like Rockefeller Oil. Others weren’t so lucky and went bankrupt.

Imagine that you have decided to open a small ice cream stand on campus called "Ice-Campusades." You are very excited because you love ice cream (delicious!) and this is a fun way for you to apply your business and economics skills! Here is the first month's scenario--you order the same number (and the same variety) of ice creams each day from the ice cream suppliers, and your ice creams are always marked at $1.50 each. However, you notice that there are days when ice creams remain unsold but other days when there are not enough ice creams for the number of customers.

Throughout history, there have been many problems present in the American life. In the time period between the 1800s to the 1900s, there were many problems such as, poor living and working conditions and powerful monopolies. Many reforms were proposed in order to solve these problems. The grisly living and working conditions, along with overpowered monopolies, were both addressed with reforms.

Andrew Carnegie and John D. Rockefeller were two of the early industrialists. Both of them were greedy criminals who exploited the country and its workers. Anyone who owned a large business in those days found it was possible to make more money by abusing the workers and competitors. Industrialists abused workers by forcing them to work longer hours for lower pay; they abused competitors by using predatory practices to either drive them out of business or acquire them. A business can do those things easily if it is a monopoly. Since a monopoly is the only supplier in a market, it prevents free market forces from setting prices. Price-fixing is an example: monopolies can keep the price high, because they know the buyer has no choice. In addition, monopolies can supply inferior products (which costs them less), again because the buyer has no alternative. As a result, monopolies have no incentive to improve their products or services, and the high prices cause inflation. This is bad for all consumers, because there will be no innovation. The early industrialists engaged in these monopolistic practices, sometimes in criminal ways, and that was bad for society.

Oligopolies have been around ever since there is trade. However, it has only recently gained grounds in this age of globalisation. Never before has oligopolistic competition been so fiercely contested across so many industries.

2. What are the differences among horizontal, vertical, and conglomerate mergers? Provide real-world examples of each type of merger. What policy do you think the US should follow toward mergers? Why?

The antebellum era held many beneficial innovations for the United States. The Market Revolution led to improvements in both travel and technology that guided America to become a more productive nation. More opportunities became available to all Americans which led to growth and prosperity of the people. The Market Revolution was beneficial to America in every way possible.

During the late 1700’s, the United States was no longer a possession of Britain, instead it was a market for industrial goods and the world’s major source for tobacco, cotton, and other agricultural products. A labor revolution started to occur in the United States throughout the early 1800’s. There was a shift from an agricultural economy to an industrial market system. After the War of 1812, the domestic marketplace changed due to the strong pressure of social and economic forces. Major innovations in transportation allowed the movement of information, people, and merchandise. Textile mills and factories became an important base for jobs, especially for women. There was also widespread economic growth during this time period

What is a monopoly? According to Webster's dictionary, a monopoly is "the exclusive control of a commodity or service in a given market.” Such power in the hands of a few is harmful to the public and individuals because it minimizes, if not eliminates normal competition in a given market and creates undesirable price controls. This, in turn, undermines individual enterprise and causes markets to crumble. In this paper, we will present several aspects of monopolies, including unfair competition, price control, and horizontal, vertical, and conglomerate mergers.

Since we know that most companies have the common objective to make money, we know that they function for their self-interest. Rent seeking and monopolies harm our society. It makes us question and become more apprehensive about our government and fear reform. Rent seeking has serious consequences to our country’s economic growth and development. It reduces competition and innovation, it allows for wasteful spending of resources, productivity and limits profits for everyone. More importantly it creates a less inclusive and divided society. Rent seeking doesn't add to national value, in fact it’s a one-sided profit earner. It’s essentially one-sided trade and benefits the side willing to pay more. It can also involve illegal activity like piracy and bribery. What kind of society would we be if we continue to engage in illegal

Moreover, If you’re a company owner and you make a product you don’t want competition. But once about only ten percent of people in America own a business or company there is gonna be competition. As a consumer you want competition it forces the companies to make better goods and provide better services for cheaper more fair prices. Which then allows you to be able to buy more goods and services. Which then allows you to be more successful in life and achieve more goals and those goals faster.

In the UK, the three leading competitive coffee brands are Costa Coffee (with 1,992 outlets), Starbucks Coffee Company (with 849 outlets) and Caffè Nero (with 620 outlets). They enjoy a 3-firm concentration of 53%; (Market concentration measures the market share of the largest companies in an industry)

Has the economy ever thought about direct impact from monopoly and oligopoly industries? The structure of a monopoly based industry exemplifies one seller in the entire market. On the other hand, the concept of an oligopoly industry illustrates few sellers that have the potential of making a direct impact in one single industry idea. The economy has depended on the market share of a monopoly and an oligopoly trade. However, a monopoly industry differs from an oligopoly industry due to a monopoly competitor dominates a majority of the market share of many industries and an oligopoly competitor contains few sellers who dominate a market share based on one single industry idea.

1. Analyze the fast food industry from the point of view of perfect competition. Include the concepts of elasticity, utility, costs, and market structure to explain the prices charged by fast food retailers.