Essay on Should monopolies be allowed
Should monopolies be allowed Essay : Monopoly refers to a market situation in which there is only one seller of the product and the entry of any other competitor is avoided. The product that is sold also has no substitutes and it has the power to influence the market price. This implies that it can increase the price by exceeding the output which can bring down the price. On the other hand, in a perfect competition market, many individual producers exist in the market and thus, no one has the power to influence the market price. In the case of a monopolist market structure, a customer is left with no choices and thus they have to purchase the desired product even if the price is higher. Thus, monopoly shall not be allowed in the market owing to the disadvantages it entails.
Discussion
In a monopoly market structure, there are no competitors for the products and thus, the monopoly charges exorbitant prices for the products. For instance, in the 1980s, Microsoft demanded an increased price for Microsoft Office as it dominated the entire market of PC software. Furthermore, the consumers have no access to the available products and so they are not allowed to make any comparison between the good and the bad. Thus they are compelled to pay greater prices for the products. At times, the price exceeds the marginal costs and this leads to allocative inefficiency.
In the absence of perfect competition, monopoly companies do not come up with much innovation. Consumers also believe that there is inadequate motivation to manufacture new products. Most American societies regard monopolies to create a market fall. This is because the main concern of the monopoly market is to charge whatever price they want without even considering the problems faced by the customers. India also offers a home to the monopoly companies and one such company is the IRCTC which owns a 100 per cent market share IRCTC is a state-owned entity, which has no other alternatives. Moreover, Nestle also occupies a market share of 96.5 per cent and it mostly gained its popularity by being the leading manufacturer of baby food. The company has spent more than a century in the Indian markets and gained its prominence by being a wellness company.
Diseconomies of sales are mostly created by the monopoly market as they tend to exceed the surplus in the absence of no competition in the market. Consumers also get dissatisfied as they are not allowed to select from a wide range of different products. Often the suppliers are not benefited from the monopolist firms. This is because these firms pay low prices to the customer as they dominate the entire market. The employees of the monopoly companies also complain about the low salaries and wages they get and also they have no other option but to shift to other companies of the same type.
Conclusion
In conclusion, it can be said that monopolies shall not be allowed to function completely. This is because there is no scope for other firms to operate in the market. Thus consumers are not allowed to have access to a wide variety of products of their choice, which is deemed necessary. In addition, it is also not legit for any firm to dominate the entire trade market. Hence, it is necessary of having an oligopoly market structure where there will be a large number of sellers charging a fair price from the consumers.
FAQs
1.) Which market structure is good for the consumers?
Ans: An oligopoly market structure is regarded as beneficial for the consumers.
2.) State any one disadvantage of monopoly.
Ans: Monopoly acts as a barrier to all the companies entering and operating in the market.
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