There as advantages and disadvantages of monopolies on the economy. The research focuses on the effects of monopoly on society.
The research includes the benefits of having a monopoly. There are advantages of removing a monopoly. Some Monopolies are beneficial to society. Basically the research paper focuses on determining how monopolies or either beneficial or bad to the economy.
However, it is very clear that monopoly directly affects many facets of the Industrial organization. Initially, the monopoly occurs when a one company, organization or individual sells the only product service to the general public. Charles Geisst (11) reiterated monopolies have a long and colorful history in the United States. They have usually been associated with industry, especially in the post-Civil War period. But their history is much older.
In Elizabethan England, during the historical time period where the American colonies became independent, the terms monopoly and antimonopolist had been well understood by the people of that time period and well implemented. Yet nothing was written about monopolies in the United States Constitution, and no mention was made of them in the writings of the nation’s founding fathers. However, several states felt strongly enough about them to prohibit them in their constitutions in the months after independence. Less than a century later, they were the most discussed topic in the country. Jonas Zoninsein (11) based on available research data, Finance Capital may be regarded as the seminal work of an influential group of modern economists that distinguishes two stages in capitalist development: the stage of free competition and the stage of monopolistic capitalism. The latter is said to start in the structural changes passing through the clutches of capitalism in the late nineteenth century. This players may have generated qualitative modifications in its essential laws.
A monopoly can be coercive. The coerciveness crops up when the monopolizing company prevents other competitors to enter in the same market segment. In addition, Willi Semmler (106) emphasized both the neoclassical theory of imperfect competition and the post-Marxian/ post-Keynesian theory offers the readers an empirical concept to measure monopoly power as a possible cause for profitability variances. There other types of markets.
The time clock market states it is assumed that the degree of monopoly of a market segment is determined by the degree of saturation in the seller market, which is a measure of independent firms in the market segment and their capability to affect the market price of the commodities the extent of entry barriers to industries, which is a measure of the mobility of capital between industries the degree of collusion between the firms within one industry or across industries, which is a direct measure of eliminated competition and the influence of oligopolies on prices and quantities. This argument holds that the degree of concentration determines the possibility of colluding within one industry, whereas high entry barriers decrease the potential competition from outside the industry. Thus, high entry barriers are deterrent to new competition. There are beneficial monopolies. The government can give the monopoly organizations certain market segment advantages. For example, the United States government can offer one company the monopoly to provide quality electricity services to the community.
The government can offer monopolies by offering an organization patents, trademarks, and copyrights. For example, only Nike Company and its distributors are legally allowed to manufacture and sell Nike sports shoes to local and foreign clients. A patent is a grant given the local government to the inventor or creator of a process or object to exclusively sell the products and service to the general public. The patent is limited to a maximum number of years. In addition, a copyright is the right given to the author of books and the writers of songs. Trademark is what identifies a brand over another brand.
The Nike sports shoe brand has a different client based over the Puma rubber shoes brand. In addition, Dean Malatesta (251-283) emphasized When competition is naturally limited, policymakers craft regulation to obtain effects similar to those that would have occurred in the presence of competition. In many instances, regulation of this type is not successful in overcoming market failures. The researcher depends on property rights theory and transaction cost theory to predict when state-level policy statements will actually lead to a redistribution of benefits at the city level. We test this theory in the context of cable television franchise renewal agreements—a setting historically resistant to competition. Malatest emphaised “We look to the language of the franchise agreements for evidence of concessions made by the cable operator to the city, and using a difference-in-difference estimator, we find that pro-competitive regulation translates into concessions to the city. However, a credible threat of competition embedded in regulation is not enough to curb opportunism associated with monopoly supply in cases of large franchisees; larger cable operators are at least 60 percent less likely to offer more favorable terms of trade” (Malatesta 257).
However, consistent with transaction cost predictions, asset-specific investments by the cable operator do curb opportunism; there is more than 50 percent increase in the odds of a franchisee offering more concessions for a 1 standard deviation change—about 1,020?mi of the plant. These findings are important for those involved in crafting policy at all levels of government as well as for researchers interested in understanding the role of long-term contracting and the use of hybrid mechanisms such as franchise agreements in contemporary governance. Further, the government’s approval of only one water utility company in a community will lower the household consumer’s water bill.
The water company is able to collect water revenues from more households. The revenues are used to cover the expenses of running the water business. If the government approves the franchise of two water companies, the water bill of each household will increase. Since there are lesser households paying for their water bill, the water bill company has to increase its water billing rates to cover all the expenses of running a water utility company. There are advantages of engaging in a monopoly. The single company can bring out the importance of dictating a fair or reasonable price of goods and services offered.
The monopoly does not need to spend more advertising money to indicate the many advantages of patronizing the monopoly company’s exclusive products and services. The customers are forced to accept the high prices of the monopoly company’s products and services. The customers are not given the privilege of choosing another competitor that offers the same quality and price of the product or services. In addition, the monopolistic company is the sole provider of the community’s required goods and services. The private company can set up barriers to ensure the blocking of the entry of competitors into the same market segment. The actor Charles Geisst (282) emphasized that after 100 years of trying to come to grips with alleged monopolies, not a single person had hoped or wanted the 1980s and 1990s to become a revolution in industrial organization and a boom for Wall Street’s mergers-and-acquisitions specialists. Yet the historical United States industry had been on the verge of its greatest change since the days of Gould and Vanderbilt. To add some funny tones and sarcasm to the financial trendiness of the 1980s, an off-Broadway theatre play with a distinctly Brandeisian tone went on nationwide tour.
Likewise, the Other People’s Money was a satire of all of the favorite corporate raider devices of the decade, including poison pills, shark repellents, and greenmail. Based upon past experience, the slowdown in economic growth and the ebbing of the conglomerate trend suggested that large corporations were poised to take a breather in their quest to merge and consolidate. In fact, some of the largest and traditionally most vulnerable industries, such as steel and oil, were making plans to merge. Geisst (47) further discussed, in the 1890s monopolies and trusts were popular topics of conversation. Caricatures of monopolists and trust busters were often found in the popular magazines and journals. John D. Rockefeller, Andrew Carnegie, J. P.
Morgan, and Jay Gould achieved the status of household names. Unflattering caricatures of them by Thomas Nast, W.A. Rogers, and Louis Dalrymple in the newspapers and magazines continued to hide them from the public kept them in the public spotlight. And their reputations had grown far beyond the shores of the United States. Many persons residing in Europe, and especially the British, appeared fascinated by their nouveau riche cousins who had risen from humble beginnings to lofty employee ranks beginning or jump off point positions in society. These industrialists were the very embodiment of what the United States symbolized–hard work, opportunity, and, most important, a laissez-faire economy.
But it would not be long before the tide quickly started to change. By the last decade of the nineteenth century even some of the hardened industrialists were sounding the death call for the end of trusts. The author (Geisst 25) further discussed the 1920s were years of hard times during the 1920 era had been years of great contradiction. “Business, employing new technologies eagerly sought by the public, began to circumvent the antitrust laws as flagrantly as at any time in the past. It became the decade of the consumer, who was bitten by the urge to purchase automobiles, radios, and appliances as never before. Technology made new products available, and innovative production made them widely accessible. The same consumers became less demanding of their government than the previous generation. Several successive Republican administrations were tainted by scandal and a laissez-faire attitude toward business that bordered on neglect when compared with previous administrations.
The feeling in the country was that things were all right and bound to get even better. Henry Ford had announced in confidently that permanent peace was almost here because “the present generation is too intelligent to be tricked into war.” Will Rogers wrote that the climate even made politicians obsolete. The people has lost Theodore Roosevelt TR, a tough blow. But here we are still kicking. So, if we can spare men like Roosevelt and Wilson there is no use in any other politician ever taking himself serious.” In terms of economics (Karier 9), Economic theories, like economies themselves, undergo the research the historical development phase.
Many distinguished economists have left their mark on monopoly theory as it metamorphosed progressed from the rough outline sketched by Adam Smith to the precise formulations of modern theorists. And like economic growth, the evolution of monopoly theory can be characterized by periods of relative inactivity interspersed with sudden and remarkable advances. In fact, the correspondence between the real economy and economic theory is more than just an analogy. Economists generally rework old theories or invent new ones in response to new developments or trends. It is hardly a coincidence that monopoly theory experienced its most rapid development only after the massive U.S. merger movement at the turn of the century and the equally impressive round of mergers during the 1920s. The concept of monopoly power runs through nearly all schools of thought from the classical economists to the modern post-Keynesians, playing a central role in some and amounting to nothing more than a footnote in others.
What follows is by no means an attempt to recount all of these theories, which would undoubtedly fill volumes of uninspired reading. My more modest objective is to focus on the contributions of the relatively few scholars who had particular influence on the modern theory of monopoly power. In terms of economic mergers and consolidations, Thomas Karier reiterated when practiced in moderation, price competition can serve to maintain future demand, but in its more extreme form it holds the promise of greatly increasing economic power.
There are also some dangers. Other firms may retaliate, the government may intervene, or future demand may be less than anticipated. Therefore for some firms, especially relatively large ones with high monopoly power, price competition may not be a desirable strategy for advancing their interests.
An alternative for the firm, suggested in the previous chapter, is to resign itself to maximizing current profits without regard to the future. At any given time, a number of firms appear to follow this strategy. But for ambitious firms that have rejected price competition, there are at least three alternative strategies. Finns can use nonprice types of economic market competition, they can cooperate with their competitors in setting mutually beneficial prices, or they can combine with rivals through mergers or takeovers. Each of these strategies promises higher future returns without the necessity of resorting to price competition. Thomas Karier (25) reiterated One of the propositions of monopoly theory is that the potential values, monopoly and economic power, are statistically related to actual measures of business performance, price-cost margins, and profits.
In order to test this claim, numerous studies investigated the statistical messages between actual profitability and variables approximating average economic power. The fact that the two were statistically related provided strong support for monopoly theory. The above discussion creates a new question that branches out raises another question. There are some questions that can be raised. Some research questions include “Why don’t profits always equal economic power? Why are the probable values only statistically related to the actual values? The reason is that firms do not always maximize short-run profits and other firms do not always hold their prices constant. One important example of this is price competition.
A firm might come to the conclusion that the video art form can increase its future profitability if it kept its current price relatively low. While future profits can result to higher profits, may end up higher, current profits will fall below the level of economic power”. In the same manner, if the competitors cut prices for basically the same reason, the firm’s profits would again fall below its economic power. There is a glaring diversity between potential and actual profitability can also be used to implement the school’s when firms cooperate, and raise prices together. They may do it in deference to a powerful market leader or as part of a contractual, albeit possibly illegal, agreement. Whatever the motivation, the joining organizations occurs, participating firms stand to increase their actual profits above and beyond the benchmark determined by economic power. Cooperation is potentially more profitable than independent action. There as advantages and disadvantages of monopolies on the economy.
The research focuses on the effects of monopoly on society. The research includes the benefits of having a monopoly. There are advantages of removing a monopoly.
Indeed, some Monopolies are beneficial to society.
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The Economics of Mergers and Consolidations. New York: M Sharpre Press, 1994. Print. Maltesta, Deanna. The Effects of Competition -Based Public Policy on Contractual Arrangements. Policy Studies Journal.
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Competition, Monopoly, and Differential Profit Rates. New York: Columbia University Press, 1995. Zonisein, Jonas. Monopoly Capital Theory.
New York: Greenwood Press, 2000.