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
ISOQUANT ANALYSIS In the long run it is possible for a firm to produce the same output using different combinations of two factors of production.  For instance it the two fact

Kinds of Bargaining arrangements Basically there are three kinds of bargaining arrangements, namely: Open Shop: In an open shop a union represents its members, but doe

effects and implication of taxation in relation to managerial economics

Generate a computer code to simulate the following solidification situation during a casting process: The material is a well-known polymer known as PEEK (polyetheretherketo

CONTRACTING AND INSIDER-OUTSIDER MODELS OF UNEMPLOYMENT   From  the  Walrasian  assumption  of  a market-clearing wage  on  efficiency considerations  -  it was  postulated  th

a)      In 1948, the money GNP was $520 billion and the price index was 120.  In order to   make the 1948 GNP comparable with the base year, the 1948 GNP must be adjusted    to:

discuss the significance of managerial economics in regards to business strategies employed by business entities currently operating in the global economy

Q. What do you mean by Legal Monopoly? Legal Monopoly: Some monopolies are engendered and protected under various laws. Inventors of new processes, devices or articles attain

Rail Tours sells packaged tours on rail lines, including gourmet meals and a reserved bed. The most popular tours are in the autumn when colors are at their peak. The overnight pac