What are the arguments in favour of anti-monopoly legislation and under
what conditions might monopolies be allowed to exist?
1. What are the arguments in favour of anti-monopoly legislation and
under what conditions might monopolies be allowed to exist?
Before discussing the arguments in favour of anti-monopoly legislation
and the conditions that a monopoly would be allowed to exist it is
important to define monopoly and its market structure. It would be
easy to define monopoly by considering the existance of only one firm
in a certain industry. but the definition of industry is not always
that specific. For example, BMW might have a monopoly in a specific
type and design of a car but it certainly does not have a monopoly in
the whole car industry area. Or 3M might hold a patent certificate and
certainly a great slice of the Post-It notes but that does not mean
that the consumer cannot access stick-on notes almost identical to the
post-it's (and maybe in a smaller price). This is a vague definition
of monopoly but a firm can be more certain about its power of monopoly
when assesing the quantity and closeness of alternative products
supplied by other companies. For example, electric supply in Greece is
provided by only one company and until now its rivals, that would be
solar, wind, gas and alternative forms of energy hardly can compare
with it at the moment. Following the initial definition of the
monopoly there is only one firm in the industry so the firm's demand
curve is the industry's demand curve. The demand would be inelastic
relatively at each price because the consumer has no option: buy the
product at a higher price or not have the product at all. The actual
elasticity will vary according...
... middle of paper ...
...greement or concerted
practice that has the object of preventing, restricting or distorting
competition is illegal. Also, currently under chapter II prohibition
of the 1998 Competition Act it is illegal for a dominant firm to
exercise its market power in such a way as to reduce competition. The
1998 Act does not cover in a specific way mergers, they are covered by
the 1973 Fair Trading Act, but in a broad manner even though not
restricting mergers so as to control a firms monopoly power, by
toughening its policy towards the abuse of this power it prevents
excertion of monopoly power to the customer.
Finally, one can say that all measures and restrictive policies are
not foolproof but they surely can give the consumer a sense of
security and the firms an initiative for investment, development and
enhancement of services or products provided.
40% grade
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