Monopoly As A Monopoly

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In the marketplace, consumers will always have more purchasing power in a monosomy market in comparison to a monopoly where the sole producer has the power. Monopolies form in several situations, typically through many entry barriers or government regulation. In some cases, the government relegate a new monopoly in a market owned by the government. If we were to look at an example of a government owned monopoly in Ontario, the first thing that may come University students of legal drinking age (and probably underage students too!) would be the LCBO. For those students who have every traveled to any other province, they would find many sellers in the market which is known as a monopolistic marketplace. One of the benefits of having monopolistic…show more content…
There are a number of approaches that can take the teeth out of an economists bite, and they all involve the government. The government can do any of the following: Create laws that encourage competitive markets, regulate the monopoly or own the economy” (CPE pg.131). The Ontario government decided on the third option. Typically, governments take control of a monopoly for social reasons like nurturing an industry that otherwise could not materialize domestically without the government providing that service (Air Canada and Petro-Canada was created for these reasons). Selling liquor is quite different from this as there would be few barriers to trade in the free market. Convenient stores and many other merchandisers could easily provide the service that the LCBO provides at a cost significantly less at the cost of producing the item. Therefore, the artificial market managed by the government is not efficient like many monopolies. However, the monopoly own by the government is producing a significant firm surplus at the expensive of the deadweight loss it creates as resources are not being managed as efficiently as it could…show more content…
In a recent report, claiming consumers could pay less for booze and the province could brew more profit from alcohol sales if the government opened up the business to more retailers. This report stated that the LCBO is actually foregoing revenue by preserving its virtual monopoly on the sale of alcohol. These changes would increase the choices available and reduce prices for Ontario consumers, as well as improve the competitiveness of Ontario 's smaller wineries and breweries and generate more revenue for the government. The reasoning by the government by creating the deadweight loss by the government is selling achaul in a socially responsible
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