Monopolies in the Market Place: Example of the Telecommunication Industry

Federal Regulations on Trade Traditionally many utility industries have been comprised of monopolies. These natural monopolies exist for a number of reasons. Monopolies in the marketplace create great inefficiency, and thus are very undesirable. It is for that, and many other reasons that regulation was thought of as a solution to the monopoly problem. Regulation was not just used to overcome such great inefficiencies created in a monopolistic market, but was also used to supply consumers with necessary goods. A good example of this can be seen in the telecommunications industry. There is a lot of money to be made in long distance telecommunications, while supplying phone service to a small, very economically diverse, rural town on top of Mount Taikonduroga would never prove economical. Thus the local telecommunications service to the small rural town could not sustain itself. The costs to the firm would never be supported by the consumers in that area, and thus to encourage a firm to supply to the town the government must set up a regulatory practice that would ensure a firm to make...