Monopoly in economic terms is where you have only one company running the industry of the same product. For instance, “Microsoft office” and “Windows”. To achieve having monopoly in today’s business world is a hard thing which requires a lot of work, time and patience. Today the perfect competition exists only in theories but if we take a look at the stock market, we can see that it is very similar and close to the perfect competition. However, in perfect competition we have assumed that all firms and households are price takers in input and output markets. Also that firms and households have perfect information and finally that is the reason that the firms in perfect competition are maximising their profits.
On the other hand, it is easy to understand that when a firm is able to control the price or output in the market, or in other words when there is monopolist in the market that means that this market have imperfect competition. However, in market with imperfect competition the firms have the ability to raise price without losing all demand for their product. If in the same market, exists a firm which is monopoly, it is very difficult for the small firms to raise price or to maximise their profits. However, the ways that those firms are using to equalise or to keep the balance between the bigger firms or the one which is monopoly are the advertisement or usually they trying to improve the quality of their products. Unfortunately, it is very difficult to get that point, because the bigger and more powerful firms are using the same ways. In addition, it is much easier for the monopolist to improve the quality of its products and also because of the financial opportunity they do more effective advertisements. Finally, in these kinds of markets the most usual result is that there is to many small companies that going through bankrupt.
Eventually, to conclude my essay, I would like to give an attention to the power of the money in general. Because of the globalisation which has changed the business world around thirty years ago, there is too many individuals with incredible fortune where can change the general icon of the markets from one day to another. As we all know the instance of the Chelsea’s football club owner, Russian, Roman Abramovich. The Russian magnate, as he said just from the beginning of his investment on the premiership that he invested his hundred fifty million pounds just because he had a dream to be in a football environment. The reality is that Mr Abramovich with this movement has changed the general icon of the English premiership. However, I am become to the conclusion that it is not only very hard to become a monopolist on the business world but it is also very hard to keep that point. As we all know that the biggest football clubs in England are Manchester United and Arsenal, on the other hand in my opinion, Chelsea’s football club have the same possibility today to be champion at the end of the may 2004.
Finally the perfect competition is the only way to have the perfect economy but in our days, because of the power of the money as I said before, it is very close to impossible. However, there is not any company or market with perfect competition in our days, the only market which is very close to the perfect competition is the stock market and the reason that I am telling very close and not exactly perfect competition is because of my experience on the stock market in Greece. In 2001 the Greek stock market in Athens has the biggest crash of its history, just after of being advertised very well to the population in Greece as the market with the perfect competition. Unfortunately, there were too many people who lost big amount of money in this particular perfect competition.
Typical Monopolistic diagram