Purchase Solution

Monopoly: Benefits

Not what you're looking for?

Ask Custom Question

According to DeMarco (2001), it is a common view that monopolies are not only economically objectionable, they are also ethically objectionable. Operating like a command-like structure, the monopoly blocks competition and distorts the markets natural mechanism's such as the ability to self-organize and self-correct.

As we have learned in previous business courses, economic inefficiencies, low costs, and market freedoms demand competition. If this is truly the case, then monopolies, by there very definition, are anti-competitive and therefore not able to provide efficiency, low cost, or market freedom. If we look at Manuel Velasquez's Business Ethics: Concepts and Cases, Mr. Velasquez argues that with competition comes justice and with justice, efficiency. So if monopolies reduce competition, then monopolies harm justice and thereby hinder efficiency (DeMarco, 2001).

But what if monopolies were not necessarily economically abhorrent. What if the argument for the relationship between competition and justice was questionable? Are there advantages to a monopoly?

Attachments
Purchase this Solution
Solution Summary

This solution explains how monopolies can benefit the economy. The sources used are also included in the solution.

Solution Preview

Step 1
If monopolies were not necessarily economically abhorrent, and the relationship between competition and justice was questionable, there would be several advantages to a monopoly.
From the perspective of a country it is helpful to establish monopolies in different areas for utilities. For example, there are third world countries ...

Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

View More Free Quizzes
Related BrainMass Solutions

  • Benefits of a monopoly or an oligopoly

    Brief summary of the benefits of a monopoly and oligopoly.

  • Social Welfare Long Term Outcomes

    In a monopoly market some of consumer benefits are captured by a monopolist as its profit, while some consumer benefits just disappeared as a deadweight loss.

  • Price monopoly and consumers

    For example, someone without medical insurance might need a drug and the manufacturer might have a monopoly over that drug. It might simply be that the person cannot afford it and does not receive the benefits of the medication.

  • monopoly power that is not due to government regulation

    benefits the producer as producer price the product higher than the normal profit level. A pure monopolist can take market demand as its own demand curve.

  • Finding Nash equilibrium

    Describe the potential benefits to be derived from collusion. Do you see any obstacles to coordinating such collusion? There is a Nash equilibrium, which is that both AIG and AXA play limit price (and the payoff is (8,3)).

  • Monopoly Concepts and other Competition related concepts

    ability to pay and benefits received fairness only benefits received only ability to pay Sales taxes are considered to be ______.

  • Research and patents, pollution, and more

    Which situation would create more monopoly power in the market? The benefits from research and development are often in the form of patent protection. So, if patent protection increased, companies would be more likely to conduct more research.

  • Microsoft Case Study: Anti-Trust Behaviour, Monopolies

    Following are the key benefits of the monopolies:  In the monopolies, company devotes more money into research and development due to huge profit and offers new and innovative product or service to the customers for satisfying their needs.

  • Global Economics with Monopolies and Oligopolies

    Discuss the benefits and drawbacks of dynamic pricing for that particular company. Conclude with a summary of your findings. You have been contracted by a competitor of SBC to conduct some background research on SBC.

View More Related Solutions