Negatives Of Monopolies

A monopoly is a company that is the sole provider of a product or service. When there is a monopoly on a product, it means that there is not viable substitutes or competitors for the product or service that the company provides, and barriers that keep other companies from entering the market. Because the monopoly is the only company providing a product, they control price, supply, and other significant details of a product. Monopolies that are seen in a negative light are raising the price of products to higher than what they are worth and consequently being unfair towards their consumers by giving them a bad deal on a product (Cox). Of course, not all monopolies are bad for consumers.

Monopolies are usually thought to be evil corporations

An oligopoly usually consists of two to ten companies that are selling products with little to no differentiation. While the companies do hold some control over the price of the product they are selling, it is mostly dependent of the pricing of the competitors’ product. The companies in an oligopoly rely heavily on advertising and marketing their products to appeal to consumers. This is because all the companies in the oligopoly have to try to stay a step ahead of their competitors in order to appeal to consumers (S, S.). An example of an oligopoly is the cell phone industry. Verizon, AT&T, Sprint, and T-Mobile are the four dominating competitors in the market. These four companies are the only ones offering a reliable plan, at a (not so) decent price. They are constantly advertising, it seems as if every other commercial and ad you see is for one cell phone company or another, for one outrageously expensive plan or another. This goes to show that just because there is some semblance of competition between companies in a market, does not mean that consumers will be receiving a fair price on a product or

If the demand for a product is low, then a customer will not be willing to pay a higher price, but if a product is in high demand, then a customer will be more willing to pay a higher price. Other factors may include location, age, and economic status. An example of price discrimination is the price of textbooks. Due to the copyright protection laws, the cost of textbooks in the United States are much higher than in other countries (Price). While price discrimination can be a bad thing, that is not always the case. An example of price discrimination that benefits consumers is age discounts. Often places like movie theaters and restaurants will have discounted items for customers like senior citizens or children. Another example is occupational discounts, such as military discount (Price). Price discrimination is commonly used in competitive markets to benefit businesses and consumers, but monopolies use it to benefit only themselves at a cost to