This article defines and discusses the meaning of monopoly and tries to explain how one company can control all of the market. It will then discuss whether a monopoly is good or bad and for who?
So, what the hell is a monopoly? Well monopoly is a generic name for a company or individual that controls most or all of the supply of a product or services. This means that it can control the price of a product, and if a company can control the price of the product then it can easily maximize its revenue. In other words, the monopoly takes advantage of its special ability of setting the price and by doing so the customers and other small competitors are hurt by this.
So how can a company reach the status of monopoly? Well, some companies can guard their product or service through things such as a patents or trademarks. These are very reliable tools to guard a unique product. If you have a product with a patent you automatically become a monopoly because you are the only one that can sell or manufacture it, but it’s very hard to create a product that have sufficient demand in the market and yet has a unique quality such as innovation in its manufacturing process or in the makeup of the product itself. A company can also get big enough and become a leading force in the market. It can also be that the market is too small and the first company takes over all the market. Sometimes a company can be so good in the manufacturing process or have such a uniquely professional work force that it can eliminate competition, but that’s highly unlikely. In some rare cases a country can give a company monopoly rights.
Sometimes giving patent rights can do much harm to the public and even raise ethical questions. For example, every year the pharmaceuticals industry invents lots of new medicine under patents and that’s way those companies sell them in such high prices. This medicine can be a life-saving yet the poor can’t get it because it is too expensive. But if the product didn’t have the protection of a patent and instead was a commodity in the free market, many more lives would be saved.
In conclusion, a monopoly is bad for consumers and very good for the monopoly. Sometimes monopoly status can lead to unfair consequences. In one side of the market economy there is perfect competition, which means that the consumers enjoy the lowest prices possible. On the other hand, there is the monopoly, which means that the one company sets the price and gains maximum revenue at the expense of the costumers.
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