A monopoly from start to finish Essay Example for Free

A monopoly from start to finish EssayDuring out studies this destination we perk up learned a lot about a Monopolistic way a company is able to maneuver in the business marketplace and I would like to refresh your mind by offering a clear definition. A Monopoly is a situation in which an entity, either an individual or an sedulousness or organization, is the sole supplier of a particular good or attend to. As such, this supplier has no competition from other suppliers and is able to restrainer the market value of the commodity. Some monopolies are government-enforced or controlled, while others form naturally or through company merger.According to our focus of this paper, we are intercommunicate 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 structure. One of the headings we mustiness answer regarding this change in business structure is how the company s shift to a monopoly will benefit the stakeholders winding. One of the stakeholders who may be involved is the government. Monopolies sanctioned by the government are called legal monopolies.These are considered coercive monopolies, meaning that other companies are forbidden by law to compete against them. Governments alike maintain some control over monopolies through competition laws, which prevent monopolies from engaging in unscrupulous or anti-competitive radiation diagrams (http//www. reference. com/motif/Society/advantages-disadvantages-of-monopolies). The second dubiety 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 sire to reside about competition from other companies in the same market.Consumers are affected by this change because they must either get the product or service from the monopoly or do without it. When a company transitions from a monopolistically competi tive firm to a monopoly, there will be changes with regard to prices and output from both of these market structures. So, lets take a closer look at how prices are affected when a firm becomes a monopoly. A common practice among some monopolies is price distinction, in which the monopolist charges some segments of the population more than others for the same product or service, based on a higher pack 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 grease ones palms or sell a product, service, or commodity whole at a fixed price, or maintain the market conditions such that the price is kept up(p) at a given aim by controlling supply and demand. When the monopoly is able to prevent buyers from remerchandising their product, they may be able to price discriminate to try the effects of monopoly power. In my opinion the most important group that is affected by a Monopoly are the consu mers.Monopolies can impact consumer prices in two simply contrasting 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 whatsoever the price they demand. This can also lead to the company providing a low quality product or service without fear of losing business (Home, 2009).Since monopolies are the only provider, they can set pretty much any price they choose, regardless of demand, because they know the consumer has no choice. Is this sort of thing fair to consumers? Of course not, but it is how king-size business is able to stay 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 their products is outstanding and I estimate t hat Apple will continue to rise in popularity for years to come.It has also come to my attending that because Monopolies try 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 different 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 cost to produce are sold by a firm at different prices.This sort of practice is highly controversial in terms of its impact on both consumers and rivals (Price Discrimination, 2006, p. 1). There are many ways to get these sort of conditions because the transactions surely need not be simultaneous indeed, there is temporal discrimination, such as between Sun sidereal day rates 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 want 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 last look for another brand that offers similar use. According to economist, the monopol istic enemys demand curve is less elastic than a pure competitor and more elastic than a pure monopolist. Monopolistic competitors have excess capacity which means that fewer companies operating at capacity could supply the industry output.It is my opinion that Wonks might 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 statistical distribution 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. http//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 Prentice Hall.