Monopoly: Is Monopoly Harmful To Society?

The market, as known, wasis expected to be a perfect competition market which have a bunch of consumers and producers. People in the market have perfect knowledge about the free market, and every firm is tend to reach its maximum profit. No individual firms can affect the competition of the market.

However, there are still some companies try to monopoly the market. In theory, monopoly is a single firm controls the whole output of the industry. According to The Economic Times, the definition of monopoly is “a situation in which a single company or group owns all or nearly all of the market for a given type of product or service.” Take an example of UK, a legal monopoly can occur when a firm has more than 25% of the total market; if this share exceeds 40%, then the monopoly is called dominant. In the situation in most countries, monopoly is illegal because it is harmful to the society.

The Monopoly is always started by the price war. The larger companies which have advantages of production can reduce their costs, so the products are sold at a lower price than most of other firms. Consumers are willing to buy the same products at a lower price because the price elasticity of demand is relative elastic. When price goes down, consumers will buy more goods. Thus the small companies

Through the price war of reaching monopoly, the bankrupted small companies may suffered from the bank loan. A lot of people will lose their jobs and government have to subsidize them to continue their life until they find another job. Once the firm monopolies the market, it will not continue innovation because it need not to compete with other firms. In addition, the export goods which produced by the monopoly companies can easily gt retaliation from other countries, such as getting higher tariffs or quotas. (Ttariff is the tax on import goods aimed to save local industries; quota is amount limiting of import goods into the