• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

Which is best perfect competition or monopoly?

Extracts from this document...

Introduction

Which is best perfect competition or monopoly? Perfect competition is a market or industry characterized by a very large number of small firms producing an identical product. None of the firms have the ability to influence price. Instead, the firms are "price takers" in that they can sell all they are able to produce at a given price. There is free mobility of all resources so that the conditions of entry and exit into and out of the market are very easy. All buyers and producers have complete and perfect knowledge as to present and future prices. The demand for the product is perfectly elastic. Perfect competition is the easiest of the market structure models to start out with. In perfect competition, we can look at the principles and ideas that cover most aspects of market structure, without adding too much initial complexity. Then we will determine how much output the firm produces, whether the firm should produce that amount of output and whether the firm makes a profit or a loss. ...read more.

Middle

This implies that there be no transaction costs. Being a single seller, by itself, is not good, nor evil, it depends on how one obtained that single-seller status. Did one obtain a monopoly by economic competition in the marketplace, or did one obtain it by political pull, i.e., lobbying? If such status is gained by competition in the free-market then the "monopoly", the successful business, is good. If such status is gained by using the government, or Mafia, to force one's competition out of business, then the monopoly is evil. As all political intervention (initiation of force) in the marketplace is outlawed under capitalism, a harmful monopoly under capitalism is impossible. If one considers a monopoly by definition as intrinsically evil, then only "businesses" that obtain their market share by having their competition outlawed can be called a "monopoly". If any company is a single seller in any industry and starts making profits higher than other industries, due to high prices; it will attract competition into its industry, as other capitalists move their capital from less profitable markets to more profitable ones. ...read more.

Conclusion

Monopolies are not intrinsically evil (big is not inherently evil), nor are monopolies subjectively evil; monopolies are good or evil depending on how they are formed. If formed according to the laws of the free market capitalism they are objectively good. If formed through irrational political policies they are objectively evil. There is no such thing as a profit that is too high or too low. That is, there is no such thing as an "excessive" profit. There is only the profit that men earn. Market Structure Number of Producers Unrestricted Entry and Exit Ability to Set Price Long-Run Economic Profits Nature of Product Perfect Competition Very Large Yes None Price Taker No Standardized Monopolistic Competition Many Yes Some No Differentiated After looking at the facts of both monopolies and perfect competition, in my opinion I think that they are both good in different ways, they both have advantages and disadvantages. Although if had to choose one, I think it would have to be a monopoly. A monopoly is a really good idea, so long as it is achieved in the right way. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our GCSE Economy & Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related GCSE Economy & Economics essays

  1. "If real world markets can be made to resemble more closely the model of ...

    This is shown by the diagram below. Using the example again of farming, if one farmer were to double his wheat output, it would have little effect on price and demand. If all the farmers where to double their output, the price of wheat would collapse. In other words, a firm in perfect competition can therefore expand or contract its output without changing price.

  2. The structure of the airline industry.

    As the economy strengthens and consumers' fear of flying subsides, the airline industry is well positioned for the future barring another catastrophe. Another component, capacity, is a revealing trend that bodes well for the airline industry. Fourth quarter capacity was estimated to be down 20%.

  1. Competition Theory A. Outline the role of competition in ...

    The five types of market structure each play different roles within the market that they would operate in. At one end of the market spectrum we have the unattainable perfect competition, and on the other side of the spectrum we have the unattainable pure monopoly.

  2. Expensive Way Home - Analyzing the Natural Monopoly Of Railway China

    According to this definition, Railway China is a typical natural monopolistically industry, whose long life-spanned fixed assets are hard to transform to other use and thus have great sedimentation. This characteristic makes repetition-constructing of railways within a certain region highly uneconomical and thus catalyzes the regional natural monopoly of railway industry.

  1. Toyota Motor Company Limited

    What reasons encourage it to engage in international business activities? There are several main reasons that push Toyota to take on international business activities. Expand sales: First of all, Toyota wants to expand sales and make its name recognised. It produces vehicles matching people of every class.

  2. Discuss the proposition that the 'state-market condominium' is the best focus for IPE.

    Public domain is the most important and the political process aims at ensuring that politician serve the 'public good'.4 According to Balaam and Veseth's ideas towards states and markets, when people say about states, they usually mean the political institutions of modern nation-state, a geographic region with a relatively coherent and autonomous system of government that extends over that region5.

  1. Business Competition.

    Even the cheapest clothing must not fall apart in a matter of days. Businesses often try to convince its customers that their products are of a superior quality and in some cases worth paying more for. Selling a better quality of goods or services can enhance a company's reputation, which

  2. This report will establish the opportunities and threats presented to Sony by the EU ...

    France: very accessible to many of the rest of the EU members with a population of 59,225.7 million. Taking 3rd place in producing the grossest domestic product per head out of the rest of the EU members with $27,440 in 1997 and each person has the spending power of $21,585 in PPP.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work