MONOPOLY 4
Monopolizationof market forces is an economic term used to describe the existenceof a specific person or entity as the main supplier of goods andservices within a certain region (Campbell,2016).This is the opposite of oligopoly where several bodies supply acommon commodity. In such cases, monopolistic enterprises do not facestiff competition in the production processes. They tend not toproduce other viable goods to substitute those produced. They chargehigh prices on their products leading to huge profits considering themarginal costs of production. In this essay, I will look at thehappening of monopoly in today’s life.
in the contemporary society is characterized by several features,which include the maximization of profits, barriers within the marketforces to prevent other bodies from venturing in the business, thepresence of one supplier, and the determination of prices by theenterprises without considering the demands of the consumers(Campbell,2016).Such features or traits have always discriminated participants in themarket forces.
Monopoliescreate barriers to entry within the markets (Campbell2016) economic barriers, like the economies of scale and capitalrequirements in terms of taxes, are one of such barriers. Monopolieswill always reduce the cost of production over a huge range. Reducedcosts of production bar new business operators from competingfavorable in the current market.
Capitalavailability is also another barrier within this sphere forinstance, production process to compete a brand like Coca-Colarequires large amounts of capital. Research on market forces andmarketing of the brand to certain heights also require heavyinvestment.
Advancedtechnology leads to the rise of monopoly enterprises. For instance,the idea behind the taste of Coca-Cola is unmatched up to date. Infact, the company has integrated and applied advanced technologymaking it difficult for other entrants into the market. It is throughthe application of advanced technology that such companies producegoods at a cheaper cost in comparison with the micro companies.
Monopoliesproduce goods that do not have a close substitute Coca cola is knownworldwide to produce soft drinks. It is impossible to substitute asoft drink with alcohol hence, when there is no substitute, thedemand curve goes high leading to monopolistic profits.
Theexternal network also plays a critical role in the establishment ofmonopolies. The number of consumers of a certain good directlyimpacts on the demand for the product. Basing on the network effect,the more people use the product the more the probability that otherindividuals will be attracted to it. The best example is thedominance of Safaricom Communication network in Kenya and theMicrosoft office system in computers.
Legalrights are also a breeding ground for monopolies such rights likepatents and copyrights have always vested monopolistic powers toindividuals. A good example is in Ethiopia where books prices arehigher in comparison to the prices in the United States of America.This is due to the legal rights rendered to individual publishers whocontrol the market prices.
Conclusion
Fromthe above discussion, it is clear that the happening of monopolies intoday`s life is a result of certain circumstances. Monopolies willeven resort to deliberate actions to face out the competitors incases where they successfully beat the discussed barriers.
References
Campbell,G. 2016. Beyond Capitalism and Socialism.Vienna: University of Vienna Press