Monopolies Essay -- Monopoly Business Marketing Essays

Monopolies What is a monopoly? According to Webster's dictionary, a monopoly is "the exclusive control of a commodity or service in a given market.† Such power in the hands of a few is harmful to the public and individuals because it minimizes, if not eliminates normal competition in a given market and creates undesirable price controls. This, in turn, undermines individual enterprise and causes markets to crumble. In this paper, we will present several aspects of monopolies, including unfair competition, price control, and horizontal, vertical, and conglomerate mergers. Unfair Competition Barriers to Entry. In general, a monopoly by one company possesses the power to create barriers to entry for competing companies in a particular market. Also, once a company has achieved a loyal following, it then becomes easy for that company to maintain control of the market. Thus, leading to elimination of potential competition. Increasing Returns. In some markets, the profits for high volumes of goods are extremely exaggerated. For example, in the manufacturing industry, each product requires a certain material and labor cost to produce it. Large companies are often able to under-cut competitors’ prices, drive them out of the market, and then raise prices again.1 Consequently, this increased volume increases profit, allowing such companies an even greater power. Incomplete Information. Often, once a company gains control of a particular market, that company does not disclose complete information in regard to their products. Such is the case in the current Microsoft antitrust case. Microsoft not only does not disclose complete information on their software products, but also goes one step further by making their software products incompatible with other operating systems. As a result, the consumer has no choice but to buy Microsoft software products exclusively. Once a company has successfully dominated a business market, they can use that control to move into other markets by:  · Squeezing out competitors  · Dominating sales of the product  · Controlling prices of the product  · Acquiring additional companies, inside and outside, of the field Enforcement. The Antitrust Division of the Department of Justice is responsible for protecting the competitive process through enforcement of antitrust laws. The Division has challenged bar... ...titive effects. Third, the Agency assesses whether entry would be timely, likely and sufficient either to deter or to counteract the competitive effects of concern. Fourth, the Agency assesses any efficiency gains that reasonably cannot be achieved by the parties through other means. Finally the Agency assesses whether, but for the merger, either party to the transaction would be likely to fail, causing its assets to exit the market. The process of assessing market concentration, potential adverse competitive effects, entry, efficiency and failure is a tool that allows the Agency to answer the ultimate inquiry in merger analysis: whether the merger is likely to create or enhance market power or to facilitate its exercise. Conclusion No one company or individual should have exclusive control of a commodity or service in a given market. Prosperity in the high-technology economy of the 21st Century will depend on strict enforcement against monopolies that lessen competition along with continued encouragement of innovation. The Department of Justice must continue to open markets and ensure that they are competitive for the benefit of American businesses and consumers. Monopolies Essay -- Monopoly Business Marketing Essays Monopolies What is a monopoly? According to Webster's dictionary, a monopoly is "the exclusive control of a commodity or service in a given market.† Such power in the hands of a few is harmful to the public and individuals because it minimizes, if not eliminates normal competition in a given market and creates undesirable price controls. This, in turn, undermines individual enterprise and causes markets to crumble. In this paper, we will present several aspects of monopolies, including unfair competition, price control, and horizontal, vertical, and conglomerate mergers. Unfair Competition Barriers to Entry. In general, a monopoly by one company possesses the power to create barriers to entry for competing companies in a particular market. Also, once a company has achieved a loyal following, it then becomes easy for that company to maintain control of the market. Thus, leading to elimination of potential competition. Increasing Returns. In some markets, the profits for high volumes of goods are extremely exaggerated. For example, in the manufacturing industry, each product requires a certain material and labor cost to produce it. Large companies are often able to under-cut competitors’ prices, drive them out of the market, and then raise prices again.1 Consequently, this increased volume increases profit, allowing such companies an even greater power. Incomplete Information. Often, once a company gains control of a particular market, that company does not disclose complete information in regard to their products. Such is the case in the current Microsoft antitrust case. Microsoft not only does not disclose complete information on their software products, but also goes one step further by making their software products incompatible with other operating systems. As a result, the consumer has no choice but to buy Microsoft software products exclusively. Once a company has successfully dominated a business market, they can use that control to move into other markets by:  · Squeezing out competitors  · Dominating sales of the product  · Controlling prices of the product  · Acquiring additional companies, inside and outside, of the field Enforcement. The Antitrust Division of the Department of Justice is responsible for protecting the competitive process through enforcement of antitrust laws. The Division has challenged bar... ...titive effects. Third, the Agency assesses whether entry would be timely, likely and sufficient either to deter or to counteract the competitive effects of concern. Fourth, the Agency assesses any efficiency gains that reasonably cannot be achieved by the parties through other means. Finally the Agency assesses whether, but for the merger, either party to the transaction would be likely to fail, causing its assets to exit the market. The process of assessing market concentration, potential adverse competitive effects, entry, efficiency and failure is a tool that allows the Agency to answer the ultimate inquiry in merger analysis: whether the merger is likely to create or enhance market power or to facilitate its exercise. Conclusion No one company or individual should have exclusive control of a commodity or service in a given market. Prosperity in the high-technology economy of the 21st Century will depend on strict enforcement against monopolies that lessen competition along with continued encouragement of innovation. The Department of Justice must continue to open markets and ensure that they are competitive for the benefit of American businesses and consumers.