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Evaluate the view that governments should always prevent firms from being monopolies.

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Introduction

Evaluate the view that governments should always prevent firms from being monopolies. Monopolies are not good for us people because in a monopoly there is often just one firm leading. If only one firm is leading the firm tells us consumers what we have to pay for the product we need because the firm in the monopoly can decide the price. It can decide the price because it does not have any competitors for a price competition. Of course the firm cannot set any price they want but the firm does not have any competition and so there is no price war. A monopoly has for example the local corner shop in a small village where are to less people for a big supermarket chain. ...read more.

Middle

In addition to that if the firm is in a competition then the firms try to develop their products or for example find different flavors of a drink to have something new on the market. We need competition to have stable prices on the market because like economist like to say "Competition holds the market". With competition a company cannot just increase the price because if another company would offer the same good for a lower price consumer would buy the cheaper one and so the prices always have to be on the same level. If the price goes up we also can talk about inflation or wealth decrease because the people have less money to spend on other things. ...read more.

Conclusion

Red Bull for example is an Austrian energy drink produces that sells its drinks around the world. They also sponsor lots of events and it is much more expensive than no name brands but people prefer to buy Red Bull because they know the company's name and are willing to pay more for the original product. Red Bull enjoys their monopoly because no other energy drink brand that sells and does so much advertisement like them. So Red Bull is in a monopoly position and the people would buy it, although they would increase the price. All in all we can say that monopoly is unpopular for both, consumers and for the government. In a monopoly the prices are often higher than appropriate but with legal barriers to entry the government cannot change it. ?? ?? ?? ?? Economics-Essay Dec'08 ...read more.

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