Monopoly and Oligopoly (Sample-2)

Introduction:

Monopoly is detrimental to the society because of a number of reasons. In Monopoly only a single firm operates and its charge very high price for its services. It can be said that relevant firm charge higher value for its product then actually it must charge. Hence, society did not observe the value of money for the product firm supply to them. Due to no competition in the market monopoly firms have less incentive to reduce costs and they consistently charge higher price for their product due to which for long term people have to pay more to the firm (Pettinger, 2019).

Another negative side of monopoly is that firms did not innovate their product line to a great extent. Hence, on one hand society is paying more its need remain unsatisfied in the market. It is the liability of the firm that if it charge a higher price for the product than reasonable rate then it must also innovate its product line so that the needs of the customers can be met in the market. But a firm that is in monopoly constantly focused on earning more profit in the business (Merhav, 2017). A firm that is in monopoly often having political power. Entrepreneur by doing invention create its unique image and due to this reason it comes in contact with the political elite. Hence, this lead to political power in the hand, which entrepreneur uses for it for its business interest which sometimes negatively affect the entire society and harm its interests (Zeuthen., 2018). Sometimes, firm that is in monopoly also make available defective product to the customers and also did not give proper customer care support which negatively affect entire society.

 

 

 

Conclusion:

Apart from monopoly, oligopoly also negatively affects society. In case of oligopoly innovation did not exist in the market. Already existed players have tight control on the market and due to this reason it becomes harder for new one to enter into the industry. These firms have sufficient market share and due to this reason they did not need to do innovation in their product line. Hence, it can be said that society needs remain unsatisfied in the market even they pay a high price for the product (Garage, 2017). Interesting fact is that in oligopoly companies form a cartel under which they charged almost similar and high price. There will not be a situation where one firm will charge a low price for the product and another one will charge a high price for the product. Due to formation of cartel society have no choice and it pays similar price for the product irrespective of fact which company produces it. Firms charge high price and due to lack of option society is forced to pay even more for the product then reasonable value.

 

References:

Books and Journals

Merhav, M., 2017. Technological dependence, monopoly, and growth. Elsevier..
Zeuthen, F., 2018. Problems of monopoly and economic warfare (Vol. 25). Routledge.
Online
Pettinger, T., 2019. [Online]. Advantages and disadvantages of monopolies.
Garage, G., 2017. [Online]. 10 Pros and Cons of Oligopoly.

 

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