Monopoly Is against Public Interest Essay Example | Topics and Well Written Essays - 1250 words

Monopoly Is against Public pastime - Essay ExampleThe rigid requirements of pure monopoly make it rare in the real world. It has a number of unfavorable features collect to which whenever the government sees that monopolization may occur, they intervene to prevent it or to limit monopolists pricing decision. Following is the relation of different forms of market ATTRIBUTES OF DIFFERENT FORMS OF MARKET Market Form Number of Firms in the Market Frequency in Reality Entry Barriers Public Interest Results Long Run Profit Equilibrium condition Perfect Competition Very many Rare (if any) None Good Zero MC = MR = AC = AR = P Pure Monopoly One Rare Likely to be High Outputs not optimal May be high MC = MR monopolistic Competition Many Widespread Minor Inefficient Zero MC = MR AC= AR Oligopoly Few Produces large share of GDP Varies Varies Varies Varies Source Baumol William J., blindfold Alan S., 2007. Microeconomics Principles and Policy, 10th ed., OH Cengage Learning. In this table, the attributes of pure monopoly appear to be against public interest in comparison to other forms of market hence this idea will be discussed in further detail. Monopoly and Public Interest The reason of monopoly of a particular pissed exponent be legal protection such as copyrights, patent or license. There could be higher barriers of entry or distinguished factors of production that are possessed by a particular firm completely or economies of scale higher volume of production make firms more efficient through cost advantage. In such cases, we may say that the firm has a natural monopoly (Braun 2003). Once a firm becomes big enough in comparison to the size of the market of the product, its cost advantage may movement other firms out of competition. In this way, it is the size of the firm relative to the total market demand for the product that creates monopoly of a particular firm. For example, a bank or a petrol pump or gas station located in a rural area may be natural monopo lies due to its presence in a location where there is no competition (Eisenach, Lenard, Progress & Freedom Foundation (U.S.) 1999). Whether it is pure monopoly or natural monopoly the question arises, what might be the public interest? Theoretically, consumers want to cohere maximum benefit from their money or want to pay relatively the lowest price to get relatively highest benefit. Consumers also seek higher quality of products and consumption. They also look for a range products and manufacturers. Consumers may fail to rule the market as in monopoly they have only little or no alternatives available. Conventionally, monopoly is considered as a harmful market structure that brings unfavorable consequences to consumers and the economy at large. Competition is ever so encouraged in the market. The monopoly power of firms threatens the public interest. Monopolistic power is defined as the ability of a firm to earn higher profit by elevating and keeping the price of their products c onsiderably above the levels at which those products would be offered in competitive market. Firm with monopolistic power perpetually enjoys market dominance disregardless of the fact that they are pricing their products really high as they have no competitors to grab their share of market. The reason that goes against public interest in monopoly is always the higher level