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

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Economics-Essay                                     

                 Dec‘08

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. So the corner shop has no competition and can decide what he wants to have for different things the people need. But often a local corner shop does not play on his position and the prices are consumer friendly.

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The government should always prevent firms from being monopoles because it wants to have a fair price competition in the market. Competition is always good for us consumers because if the firms are in a ‘price war’ they try underbid each other and the consumer has to pay less. But if there is no or just a bit competition (like in a monopoly) and the firm can decide their prices then the consumer has to pay more. In addition to that if the firm is in a competition then the firms try to develop their products ...

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