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Definition..
O There is only one firm, the sole producer
of a good, no close substitutes, total market supply is identical with single firms supply.
O monopolist can raise its price and
consumers have no alternative firm to turn to in that industry, they will pay for the good or get nothing.
the exclusive right to produce some good. 3. Costs of production make a single producer more efficient than a large number of producers.
Article review..
O Monopolies arise naturally out of the free
market ? O Comparing and contrasting two theories of monopoly Economic Monopoly and Political Monopoly
O Not true ! Why?
monopoly have their separate roots in two opposite theories of competition: perfect competition and competition as rivalry.
O show that only one of these theories of
Typical assumption.
O free market leads to large firms gaining
monopoly power and being able to restrict the output of the goods they produce to arbitrarily raise their prices (Gwartney, et al., 2000, pp. 126-127)
O lead to greater economic inefficiency, a
Writers findings
O invalid view of competition and monopoly. O free market leads to the most intense competition
that is possible in any industry O government interference decreases the intensity of competition, level of economic efficiency, the productive capability, and the standard of living. Markets Dont Fail! (Simpson, 2005, pp. 31-57).
Situation given
O Microsoft, Wal-Mart, and the United
States Postal Service (USPS) O considered monopolies based on the economic concept due to their large size and market share in their respective markets
O only the USPS is a monopoly based on
monopolies arise out of the free market accepted by most economists today the greater the market share a firm has the greater its monopoly power.
provides a sound understanding of monopoly monopolies arise from the governments initiation of physical force to reserve a market or a portion of a market to one or more sellers. as long as a firm is being protected by the government, no matter what its size, then that firm has monopoly power.
Conclusion..
O monopolies are not created by the free
market. O only by government interference into the free market O when the government gives some firm(s) special privileges over others through the initiation of physical force. O Free market create more natural competition..