Arguments against monopoly, Managerial Economics

Arguments against Monopoly

However monopolies have been accused of the following weaknesses.

  • Diseconomies of scale

While the monopolistic firm can grow to large size and exploit economies of scale, there is danger that it eventually suffers from diseconomies of scale.  This will raise its LRAC and hence also raise its price.

  • Inefficiency

Since there is no competition, the firm can be inefficient as it has no fear of losing customers to rival firms.

  • Lack of innovation

Although the firm is in a better financial position to carry out research and improve its product than a firm in a competitive market, it may NOT actually do so because of the absence of competition.

  • Exploitation

Exploitation of consumer is the most notorious practice for which monopolists are known as in over-pricing so as to maximize profits, and price discrimination.

Posted Date: 11/28/2012 5:26:44 AM | Location : United States







Related Discussions:- Arguments against monopoly, Assignment Help, Ask Question on Arguments against monopoly, Get Answer, Expert's Help, Arguments against monopoly Discussions

Write discussion on Arguments against monopoly
Your posts are moderated
Related Questions
Q. Describe about Theory of Firm? Theory of the firm is associated to comprehending how firms come into being, what are their objectives, how they act and enhance their perform

What are terms included in oligopoly? Oligopoly includes: • The meaning of oligopoly, and why it arises • Collusion • Game theory, particularly the concept of the pris

Income and Substitution Effects of Price Change When the price of a commodity falls the consumer's equilibrium changes.  The consumer can purchase the same quantity of X and Y

when the data is descrete and incremental changes is measurable, what is it?

A company is selling a  particular brand of tea and wishes to introduce a new flavor. How will the company forecast demand for it.

what kind of market structure is involved for the sale of medicines and vitamins? explain

what is demand estimation

The elasticity of a demand curve is frequently judged by its appearance: the flatter the demand curve, the greater the elasticity and vice versa. However this conclusion is mislead

Q. Show the Fixed Proportion Production Function? A fixed proportion production function is one in that technology needs a fixed combination of inputs, say labour and capital,

PRICE ELASTICITY OF SUPPLY AND THE SLOPE OF THE SLOPE CURVE For a straight line supply curve, the gradient is constant along the whole length of the curve, but elasticity