Monopoly: Changes Surrounding Contemporary Businesses

The changes surrounding contemporary businesses have been noted to have increased in their frequency, direction and overall strength that have their long term implications on strategic management and investment within these industries (Barreto, 2010). The free market hypothesis has argued that optimum allocation of resources within an economy can be achieved when there is no interference from external third parties to develop effective and efficient markets (Bremmer, 2010). In order to achieve this high degree of market effectiveness and efficiency, governments around the world pursue a competition development strategy across the industries so that value maximisation can be achieved for customers and the economy. Although the economic literature has noted significant weaknesses associated with the monopolistic industry dynamics, however it has become apparent that in practice it can become an important value adding structure to achieve certain socio-economic outcomes (Cowling & Tomlinson, 2012). The aim of this essay is to critically review and discuss different arguments that have presented in favour of permitting monopoly in contemporary business environment. In order to achieve this aim, the essay uses arguments from diverse schools of thoughts and appraises their outcomes with the help of examples and case studies from practice.

The term monopoly has been defined Mankiw (2011) as the business, firm or organisation that “is the sole seller of a product without closed substitute” (p. 300). This simple definition uses term “product” in broad meanings, which includes technologies, research, processes and services (Coase, 2013). The research surrounding monopolistic market structures have argued that there are certain features ...

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