The Pros And Cons Of Monopolies

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My dear colleagues, I hope you are having a good week. This is my entry for this week. I answered the question: “Why would society sometimes NOT want to take action against monopolies?”. Please note that there has been a mix up between this week’s written assignment and the learning journal. Professor Moussavi will allow both. Thank you. Why would society sometimes NOT want to take action against monopolies? Rittenberg and Tregarthen define a monopoly as: “a firm that is the only producer of a good or service for which there are no close substitutes and for which entry by potential rivals is prohibitively difficult.” (Rittenberg & Tregarthen, 2012, 253). A monopoly has monopoly power and therefore it can set the price it deems appropriate.…show more content…
firms that provide water and electricity, and firms that install the sewage system. These firms are usually the only providers of a commodity in one area or even in one country. Having more than one firm providing these public utilities would result in duplication of fixed capital (Petroff, 1989-2005).These firms possess the approval of the government to operate. Natural monopolies are usually beneficial to societies because, if they are regulated by a relatively uncorrupted government, they can offer low prices to customers and these prices are most often lower than prices offered by competitive firms (LINFO, 2006). If these natural monopolies are offering good prices correlated with a good quality of products, societies don’t need to take any action against them. Governments grant monopolies in the form of patents, copyrights, trademarks, and franchises to inventors, artists, composers, writers, entrepreneurs and others to innovate and produce creative works (LINFO, 2006). These government-granted monopolies help the society because they are time restricted, and because there are substitutes for their products. (LINFO, 2006). Society benefits from these government-granted monopolies and therefore there is no need for it to take any action against…show more content…
(2015). Economics Online. Retrieved from: Petroff. J. (1989-2005). Chapter 5. Pure Monopoly. Retrieved from: (Pettinger, 2008a): Pettinger, T. (2008, February 9). Are Monopolies Always Bad? Economics Retrieved from: (Pettinger, 2008b): Pettinger, T. (2008, March 22). Benefits of Monopoly Power. Economics Help. Retrieved from: Pettinger, T. (2015). Advantages of Monopoly. EconomcisHelp.Org. Retrieved from: Riley, G. (2015, February 14). Monopoly Power and Economic Efficiency and Welfare (Study notes). Beta Tutor2u. Retrieved from: Rittenberg L. and Tregarthen T. (2012, March). Principles of Microeonomics. Flatworld Knowledge. Retrieved from:

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