A monopoly from start to finish Essay

During taboo studies this term we get down acquireed a lot close to a Monopolistic way a attach to is able to maneuver in the business mart and I would kindred to refresh your mind by offering a clear comment. A Monopoly is a situation in which an entity, either an individual or an labor or organization, is the sole supplier of a particular good or proceeds. As such, this supplier has no competition from other suppliers and is able to keep the trade valuate of the commodity. Some monopolies atomic number 18 government-en obligate or take holdled, while others motley natur bothy or through association merger.According to our focus of this paper, we be asking about the long-run competitive equilibrium of the Wonks Company that was earning a normal rate of return and were competing in a monopolistically competitive market place coordinate. unrivalled of the questions we must answer regarding this change in business structure is how the companys shift to a monopoly l ead benefit the stakeholders involved. One of the stakeholders who may be involved is the government. Monopolies sancti iodined by the government be called legal monopolies.These are con typefacered coercive monopolies, meaning that other companies are command by law to compete against them. Governments also maintain slightly control over monopolies through competition laws, which keep back 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 affected by this change because they must either grease ones palms the product or service from the monopoly or do without it. When a company transitions from a monopolistically competitive s quare to a monopoly, in that respect will be changes with regard to sets and output from twain of these market structures. So, lets take a closer realise at how prices are affected when a firm becomes a monopoly. A common practice among some monopolies is price variety, in which the monopolist charges some segments of the population more than others for the same product or service, based on a postgraduateer take on 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 fixed price, or maintain the market conditions such that the price is maintained at a given take aim by controlling supply and demand. When the monopoly is able to prevent buyers from re sell their product, they may be able to price discriminate to accentuate the effect 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 obviously dis quasi(prenominal) 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 provider 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 worship of losing business (Home, 2009).Since monopolies are the only provider, they can set pretty some(prenominal) any price they hold, regardless(prenominal) of demand, because they know the consumer has no choice. Is this sort of occasion fair to consumers? Of course not, tho it is how big business is able to limp on top of the market. For example, most people find that Apple products have an outrageous price tag, but I have come to learn that the quality of thei r products is outstanding and I estimate that Apple will march on to rise in popularity for years to come.It has also come to my attention that because Monopolies tense 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 disparate 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 marginal make up to produce are sold by a firm at different prices.This sort of practice is highly disputable 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 temporal discrimination, such as between Sunday order and week, day rates, matinee and evening prices, peak rates and off-peak rates, season and off-season prices. To sell different qualities 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 motive 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 of fers 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 means that few companies operating at capacity could supply the industry output.It is my opinion that Wonks major power 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 dissemination 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. ht tp//www. answers. com/topic/mergers-and-acquisitions 6. http//www. helium. com/items/1405663-what-is-a-monopoly-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 assimilator Hall.