Thursday, May 23, 2019
A monopoly from start to finish Essay
During out studies this term we have learned a lot about a Monopolistic way a company is able to maneuver in the business market and I would like to refresh your mind by offering a clear commentary. A Monopoly is a situation in which an entity, either an individual or an industry or organization, is the sole supplier of a particular good or service. As such, this supplier has no competition from some other suppliers and is able to control the market value of the commodity. Some monopolies are government-enforced or controlled, while others form natur every(prenominal)y or through company merger.According to our focus of this paper, we are asking about the long-run competitive equilibrium of the Wonks Company that was earning a normal rate of regress and were competing in a monopolistically competitive market building. One of the questions we must answer regarding this smorgasbord in business structure is how the companys shift to a monopoly will benefit the stakeholders involved . One of the stakeholders who may be involved is the government. Monopolies sanctioned by the government are called legal monopolies.These are considered coercive monopolies, meaning that other companies are forbidden by law to compete against them. Governments also maintain some control over monopolies through competition laws, which go along monopolies from engaging in unscrupulous or anti-competitive practices (http//www. reference. com/motif/Society/advantages-disadvantages-of-monopolies). The second question is how a Monopoly will affect other businesses and after research it is quite obvious from the definition of a monopoly that other companies do not have to worry about competition from other companies in the same market.Consumers are touched by this change because they must either purchase the intersection point or service from the monopoly or do without it. When a company transitions from a monopolistically competitive firm to a monopoly, on that point will be changes w ith regard to footings and output from both of these market structures. So, lets take a closer look at how prices are affected when a firm becomes a monopoly. A common practice among some monopolies is price discrimination, in which the monopolist charges some segments of the population more than others for the same harvest-time or service, based on a higher need or a wealthier consumer base.This would usually be called price fixing which is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a set(p) price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and look at. When the monopoly is able to prevent buyers from reselling their product, they may be able to price discriminate to accentuate the effects of monopoly power. In my opinion the most important group that is affected by a Monopoly are the consumers.Monopolies can impact consumer prices in two o bviously incompatible ways, they can cause prices to drop so low that it forces companies out of business or it an cause prices to skyrocket making it difficult for consumers to purchase a product, neither being a good option for the consumer. If one business is the only supplier of a product or service, the consumer is forced to pay whatever the price they demand. This can also lead to the company providing a low quality product or service without fear of losing business (Home, 2009).Since monopolies are the only provider, they can set pretty much any price they choose, regardless of demand, because they know the consumer has no choice. Is this sort of thing fair to consumers? Of course not, but it is how big business is able to stay on top of the market. For example, most people find that orchard apple tree products have an outrageous price tag, but I have come to learn that the quality of their products is outstanding and I estimate that Apple will deal to rise in popularity f or years to come.It has also come to my attention that because Monopolies try to monitor the price of products they may resort to price discrimination. Price discrimination is sometimes defined as the practice of a firm selling a homogeneous commodity at the same time to different purchasers at different prices . Of course, I believe it is important to understand what and how price discrimination occurs. Price discrimination exists when two similar products which have the same bare(a) cost to turn are sold by a firm at different prices.This sort of practice is highly controversial in terms of its impact on both consumers and rivals (Price Discrimination, 2006, p. 1). There are many ways to accomplish these sort of conditions because the transactions surely need not be simultaneous indeed, there is blase discrimination, such as between Sunday rates and week, day rates, matinee and evening prices, peak rates and off-peak rates, season and off-season prices. To sell different qualit ies or products with different marginal cost at the same price, or to buy different qualities or factors of different efficiency at the same price, is also discriminatory.Based on all of this useful information we must also answer the question regarding which market structure is more beneficial for Wonks to operate in and will this market structure benefit consumers? In my opinion it is based on the level of quality and service of the products and how much consumers are willing to pay for the products they want to purchase. In a monopolistic competitive market the consumer may choose to purchase a substitute product for a lower price, but only if the consumer values price over value.Of course with a monopoly there may be only a few companies offering a substitute product. If one companys product becomes too high in price, the consumer will eventually look for another brand that offers similar use. According to economist, the monopolistic competitors demand curve is less elastic than a pure competitor and more elastic than a pure monopolist. Monopolistic competitors have excess capacity which operator that fewer companies operating at capacity could supply the industry output.It is my opinion that Wonks might operate more beneficially as a Monopoly than at a Monopolistic Competitive firm because they will not have as much competition to deal with and they can corner the market with value and price.Resources 1. McChesney, F. S. , Shughart II, W. F. , & Haddock, D. D. (2004). ON THE INTERNAL CONTRADICTIONS OF THE LAW OF ONE PRICE. Economic Inquiry, 42(4), 706-716. doi10. 1093/ei/cbh091 2. Mainwaring, L. L. (1977). MONOPOLY POWER, INCOME DISTRIBUTION AND PRICE DETERMINATION.Kyklos, 30(4), 674. 3. https//www. fcsknowledgecenter. com/uploads/2011_Row_Crops_Industry_Perspective. pdf 4. http//academic. udayton. edu/lawrenceulrich/Stakeholder%20Theory. pdf 5. http//www. answers. com/topic/mergers-and-acquisitions 6. http//www. helium. com/items/1405663-what-is-a-monop oly-what-do-monopolies-do-how-is-the-economy-affected-by-monopolies 7. Case, K. E. , Fair, R. C. , and Oster, S. E. (2009) Principles of Microeconomics (9th ed). Upper Saddle River, New Jersey Pearson Prentice Hall.