...Monopoly Erinn Copeland ECO204: Principles of Microeconomics (BQC1232A) Instructor: Melvin Landry September 10, 2012 Monopoly Monopolies in the business world exist because dominating companies create obstacles that impede smaller companies from having an impact on the market. Monopolies are defined formally "as one firm within an industry that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry” (Case, Fair, & Oster, 2009, pg. 254). When operating within an industry where entry into that industry is easy, a company has some market power because the product they are offering is the norm; however, when operating as a monopoly, companies dominate the market because their distinctive product carries more market power. Is it more beneficial for a company to operate as a monopoly or is it more beneficial for a company to share market power with other companies within their industry? Monopolies have stakeholders such as other businesses in their industry and consumers, which are affected by how they dominate an industry. How effective is a monopoly for the stakeholders within that company? Companies that operate as a monopoly do so because there are benefits to operating this way. In 2007, the potato chip industry in the Northwest was competitively structured and in long-run competitive equilibrium; firms were earning a normal rate of return and were competing in a monopolistically...
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...Wonks Potato Chip Industry Misti Hubbard ECO204: Principles of Microeconomics Instructor: Susan Didriksen Friday, August 03, 2012 In this essay I will be covering the benefits of the new monopoly, and the changes which will occur in price and output of the product in this particular type of market structure; and market structure that will most benefit the Wonks potato chip industry. The potato chip industry in the northwest was running in competitive equilibrium in 2007. In 2008 two lawyers quietly bought all the firms and created a monopolistic company called “Wonks” in order for Wonks to operate efficiently, Wonk’s had to hire a management consulting firm which then estimated a different long-run competitive equilibrium. Economist divided the market conditions into four major categories: (1) monopoly, (2) pure competition, (3) monopolistic competitive, (4) oligopoly. In a monopoly, a single business or company supplies a product and or service for which buyers cannot find a substitute. A Monopoly may arise when one company can supply a given commodity more cheaply than two more companies can. Our textbook defines a monopoly as “an industry composed of only once firm that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry” (Case, 2009). By purchasing all firms involved with the potato chip industry the two lawyers have created a pure monopoly. A pure monopoly...
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...Final Paper Name. ECO204: Principles of Microeconomics Professor date Final Paper In 2008, two lawyers began purchasing competitive potato chip firms with the goal to form a monopoly firm called “Wonks”. After purchase of these firms, the two lawyers then hired a management consulting firm to estimate the long-run competitive equilibrium of this new monopoly. The following paper will discuss the benefits of this new monopoly towards stakeholders involved, the changes that may occur in price and output of the product in this particular market structure; and market structure that will most benefit the Wonks potato chip monopoly. A monopoly is defined as a firm that produces a product for which there are no close substitutes and in which significant barriers exist to prevent new firms from entering the industry. By purchasing all firms involved with the potato chip industry the two lawyers created a pure monopoly. A pure monopoly would allow the two firm owners to control the whole industry. By seizing control of the market, the firm would now control their position on the market demand curve. They control everything from output quantity, to price point and their only limit to production would be cost of production. When a firm controls there position on the demand curve, the firm has over all power as to what and how much product is produced...
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