...What kinds of economic and technological conditions are conducive to the formation of monopolies? In today’s economic climate, several instances of economic and technological conditions have proved conducive to the formation of monopolies or ‘attempted’ monopolies. From television stations to computer applications, the effects of monopolies can be felt by consumers across the globe. One of the most prevalent industries to see the rise and fall, and rise again of monopolies is the telecommunications industry. The Telecommunications Deregulation Act of 1996 was passed to break up the monopoly held by AT&T and to promote competition and lower prices benefitting consumers. In less than 20 years, the telecommunications industry stands on the brink of yet another monopolization by the biggest names in the business. Sprint (who purchased Centel and then Nextel) AT&T (who bought former SBC, BellSouth and Cingular) and Verizon are the big players in the telecommunications industry today, not only in the soon to be obsolete land-line business, but also in cellular communication, broadband, and digital media markets providing services such as digital cable television and on-demand movies. What technological condition has caused this? In a word; innovation. Consumer demand for more convenient ways to communicate with one another, cell phones, reliable networks, instant communications, smaller devices providing bigger services…the list goes on and on. We want more, better, faster…oh...
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...2–3 pages) that describes the relationship between regulation and market structures and how regulation affects the market. A. Define industrial (i.e., economic) regulation. Industrial Regulation happens when government commissions regulate the rates or prices of natural monopolies. 1. Explain why industrial regulation exists. In a market structure of perfect competition industrial regulation is not required because there is a lot of competition and this encourages competing industries to make good use of resources, also the price of their goods are determined by the price the market will bear and consumers benefit. Whereas in a monopolistic competition there exists a market structure that could allow competitive monopolies, duopolies, oligopolies, and monopolies to charge higher than competitive prices or the use inefficient use of resources and limited supplies, creating an environment that is not conducive to the benefit of the consumer. . (McConnell, Brue & Flynn, 2012) 2. Explain how industrial regulation affects the market. Industrial regulation affects the market by keeping prices for natural monopolies such as public utility companies economical. In the cases where natural monopolies occur, unit costs and prices are kept lower through industrial regulation as compared to being divided among many producers where economy of scale would make unit costs higher. At one time when the electric company was regulated they were only allowed to make a fair return on...
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... Debate Are government controlled monopolies better than perfectly competitive markets? yes government controlled monopolies are better than perfectly competitive markets:- 1. The reason that governments tolerate monopolies is because they are also one themselves. They have ultimate monopolistic control and the legitimate use of power and force. Whether it’s criminal justice, police, military or mail almost all government agencies function as a monopoly. They also like to give out monopoly favor to some of their well connected friends. 2. Monopsony power. A firm with monopoly selling power may also be in a position to exploit monopsony buying power. For example, supermarkets may use their dominant market position to squeeze profit margins of farmers. source:- http://en.wikipedia.org/wiki/Government_monopoly no government controlled monopolies are not better than perfectly competitive markets:- 1. I think the formation of monopoly is very important , especially during the time of recession. They can push out infant firms and became internationally competitive. The fact that they have an EOS can reflect cheaper prices of their products. However they have to earn abnormal profits , therefore they have to minimize total costs , to do that they have to pay less to their employees. That is the only disadvantage. 2. A monopoly is allocatively inefficient because in monopoly the price is greater than MC. P > MC. In a competitive market...
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... Comparative Critical Review: “Monopoly” WORD COUNT 2136 (without references) 12th May 2013 DATE SUBMITTED I confirm that this assignment is all my own work and that all source material has been acknowledged appropriately. I can also confirm that I have kept a copy of this assignment and I give permission for my work to be used for future academic purposes. SIGNED: Bolun Chen (A typed name is fine) DATE: 12/05/2013 Comparative Critical Review: “Monopoly” By most accounts, a majority of so-called private and public utilities including software, transportation, natural resources such as petrol and financial institutions among some small-scale patent firms have been granted governmental franchise monopolies in recent years. Holding such a dominant position in a market, this legal right, Monopoly - as distinguished from sellers in a competitive market - arbitrarily decides the price of their commodity unlikely being a price taker as it dose as a seller in such a competitive industry. Alternatively, these monopolists are inclined to determine the quantity of goods and services sold at a profit-maximized price, leaving it to consumers to consider how many products are needed to purchase. Due to these monopolistic phenomena around the world, many arguments about the merits and harms to society have been caused. This critical review examines two sources which aim to introduce the concept of monopoly and the measurement of monopoly power. The first source is the chapter...
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...Running Head: Northeast Dairy Compact Commission Northeast Dairy Compact Commission Yolandra G. Shipp Macroeconomics July 23, 2010 Brent Beyer The mission of the Northeast Dairy Compact Commission was to restore authority to the six New England states to set milk prices for Class 1 fluid milk sold in that region. Their goal was to ensure adequate supply of milk, recognize cultural and economic benefits of the diary industry [ (Northeast Dairy Compact Commission) ]. Established in November 1996, and expired d September 30, 2001 [ (Compact Commission Meets to Wind, 2001) ]. It was a start-up to assess the dairy industry for one year. The governing entity established is to take such steps as necessary to assure the continued viability of dairy farming in the northeast and to provide consumers with an adequate, local supply of fresh milk [ (Northeast Dairy Compact Commission, 1997) ]. Governed by a 26-member commission made of delegate members from each New England state, at least one farmer and one consumer representative must be included. The purpose of the Commission was take testimony to determine price reasonable to the milk producers, while taking unit account the ability of consumer purchase milk [ (A Program of Local Self-Reliance News Release) ]. During this time, the prices of milk for consumer’s prices were raised by 29 cents per gallon though only 4.5 cent could be connected to the Compact Commission. The remaining of the price increase where...
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...The “bathroom manufacturers” cartel case Maastricht University | | | | School of Business & Economics | | | | Place & date: | Maastricht, 28.11.2014 | Name, initials: | Romet Puiga, RP | ID number: | I6094472 | Study: | Economics & Business Economics | Course code: | EBC1010 | Group number: | 2 | Tutor name: | Kutay Cingiz | Writing tutor name: | Jim Schumacher | Writing assignment: | Main Paper (Task 10) | | | r.puiga@maastrichtuniversity.nl Table of Contents 1. Topic introduction 2. About cartelization 3. Overview of EU antitrust legislation 4. Analysis of the “bathroom manufacturers” cartel case 5. Conclusion References 1. Introduction According to the European Commission Press Release Database, 2010, Article IP/10/790, seventeen bathroom equipment manufacturers were fined a total amount of €622 million for engaging in cartelization the same year. This case certainly provides an interesting topic for research and analysis as the cartel included seventeen manufacturers in six European countries and had a lifespan of twelve years. These quick facts demonstrate just how serious, extensive and carefully covered the agreement was. Not only did this market manipulation have a significant effect on the economy of these six countries, but also on the economic situation of the European Union as a whole and therefore touched the global economy. As the case is so extensive, it is important to...
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...Introduction Monopolies are known to be the companies that possess an entire market power in their particular industry. When talking about monopolistic companies, we usually reference to a single seller of goods and services in the market. Monopolies have the ability to control prices on their production. This extreme form of imperfect competition in the market has a negative influence on consumer’s choice. In this paper I will discuss the main features of monopolies and its role in the market. Characteristics of a monopoly One of the main characteristics of a monopoly is that it is always one single seller of goods and services in the market. Monopolistic companies do not have any competition which gives them a great advantage of being able to control the prices on their production. The main goal of a monopoly is to make the maximum possible profit by using its price-setting power. Another feature of a monopolistic company is the fact that since there only one firm in the market, there is no possible way for any other company to enter this market. Of course, this perfect monopolistic company does not exist in the modern world. Today we can see very few examples of monopolies. One of them is the famous Microsoft Corporation, one of the largest PC software providers. Microsoft has been dominating in the market for years and used to own a great percentage of this industry’s market. The company made it almost impossible for its competitors to survive, by offering their...
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...As monopolies ravaged the American economy, the American public demanded a response from the federal government. Starting with President Roosevelt, the regulation of trusts and monopolies increased and continued with later presidents. This new stance was adequate in dealing with monopolies. Muckrackers such as Ida Tarbell exposed countless trusts, one of them being the Standard Oil Company. In “The History of the Standard Oil Company”, Tarbell quotes Mr. Rockefeller as saying “This scheme is bound to work. It means an absolute control by us of the oil business. There is no chance for anyone outside.” By completely controlling the oil business, the core principle of American democracy was being violated, which didn't take the government long...
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...Introduction In the UK, the NHS has existed for over fifty years and offers health care that is free at the point of delivery for everyone. This service is funded by taxpayers for the benefit of those same taxpayers. However, the option remains available for people to purchase private health insurance if they so choose. In the US, the majority of citizens have health insurance that is related to employment or purchases directly. The federal government only ensures public access to emergency services, regardless of an individual's ability to pay. They also have publicly funded health care programs that cater to the elderly, the disabled and the poor. These are two significant examples of the two different approaches to health care provision: publicly and privately funded. In this report, we are going to look into the microeconomic aspects of the two models by assessing and analysing: Health care features as policy interventions in the market The microeconomic advantages and disadvantages of the UK system The microeconomic advantages and disadvantages of the US system The role of the regulators and markets in the provision of health care Key Findings Health care features as policy interventions in the market In the majority of advanced societies, access to basic and emergency health care is considered an irrefutable moral right, regardless of gender, age or creed. But through what means should a government decide it has the right to control any health care system via administration...
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...ECO 305 WK 7 QUIZ 6 CHAPTER 9 To purchase this visit here: http://www.activitymode.com/product/eco-305-wk-7-quiz-6-chapter-9/ Contact us at: SUPPORT@ACTIVITYMODE.COM ECO 305 WK 7 QUIZ 6 CHAPTER 9 ECO 305 WK 7 Quiz 6 - Chapter 9 MULTIPLE CHOICE 1. "Risk spreading" is a motive most likely to be served when firms undergo: a. Horizontal integration b. Vertical integration c. Conglomerate integration d. None of the above 2. The source (home) location of most of the world's leading multinational enterprises is: a. North America and Europe b. North America and Asia c. Europe and South America d. Europe and Asia 3. Which type of multinational diversification occurs when the parent firm establishes foreign subsidiaries to produce intermediate goods going into the production of finished goods? a. Forward vertical integration b. Backward vertical integration c. Forward horizontal integration d. Backward horizontal integration 4. Suppose that an American automobile manufacturer establishes foreign subsidiaries to market the automobiles. This practice is referred to as: a. Forward vertical integration b. Forward conglomerate integration c. Backward vertical integration d. Backward conglomerate integration 5. Suppose that a steel manufacturer headquartered in Japan sets up a subsidiary in Canada to produce steel. This practice is referred to as: a. Conglomerate integration b. Forward vertical integration c. Backward vertical integration d. Horizontal integration ...
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...auto manufacturers as part of an ongoing antitrust investigation (“Auto parts”, 2010). Price fixing and covert collusion through cartels results in new firms not entering the industry, excessive profit by those involved in collusion, as well as loss of income by the consumer (McConnell, Brue & Flynn, 2012, pp. 230-231). The suppliers involved are the only ones who benefit due to the maximization of their profits. Price-fixing is easiest within an Oligopoly where there are a few dominant producers; making discussion and cooperation in price setting is easier. The Investigation Results The FBI investigation of Tokai Rika CO. led to charges against the company of anti-competitive conduct; price-fixing and collusion through the formation of a cartel and bid rigging. These charges were filed by the Department of Justice in the U.S. District Court in Detroit, where the U.S. subsidiary of Takei Rika is based. Tokai Rika Co. pled guilty to the charges when they were filed. The fines from the antitrust law violation led to a $17.7 million fine (UPI, 2012). The maximum fine for price...
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...firms. This means that each firm must take into account the likely reactions of other firms in the market when making pricing and investment decisions. This creates uncertainty in such markets - which economists seek to model through the use of game theory. Economics is much like a game in which the players anticipate one another's moves. Game theory may be applied in situations in which decision makers must take into account the reasoning of other decision makers. It has been used, for example, to determine the formation of political coalitions or business conglomerates, the optimum price at which to sell products or services, the best site for a manufacturing plant, and even the behaviour of certain species in the struggle for survival. Adapted from Brittanica The ongoing interdependence between businesses can lead to implicit and explicit collusion between the major firms in the market. Collusion occurs when businesses agree to act as if they were in a monopoly position. KEY FEATURES OF OLIGOPOLY * A few firms selling similar product * Each firm produces branded products * Likely to be significant entry barriers into the market in the long run which allows firms to make supernormal profits. * Interdependence between competing firms. Businesses have to take into account likely reactions of rivals to any change in price and output THEORIES ABOUT OLIGOPOLY PRICING There are four major theories about oligopoly pricing:...
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...practices depends on how ethical a business is. Below I will explain why I do not believe these laws are effective due to the way ethical businesses follow the law and unethical businesses do not follow the law. In response to the growth of monopolies that threatened to destroy competition in the marketplace Congress passed the Sherman Antitrust Act in 1890. According to the Encyclopedia of White-Collar & Corporate Crime, “The Sherman Act was officially enacted because companies in various industry groups were attempting to eliminate their competition in the marketplace, thus hurting the economy.” (Encyclopedia of White-Collar & Corporate Crime, 2004, p. Introduction) The Sherman Act has two provisions in place to prevent this. The first stops the restraints of trading between states or foreign nations and the second makes monopolies illegal. The penalties for violating the Sherman Act are severe and include prison time of up to 10 years and a $1 million dollar fine for Individuals and $100 million dollar fines for businesses. The Clayton Act was passed by congress in 1914 to clarify and strengthen the Sherman Act. As stated by Britannica, “…the Clayton Act defined as illegal certain business practices that are conducive to the formation of monopolies or that result from them.” (Clayton Antitrust Act, 2014, http://www.britannica.com.proxy.devry.edu/EBchecked/topic/120766/Clayton-Antitrust-Act) Although the Sherman Act has severe consequences, when implemented, it...
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...Monopoly is a term used by economists to refer to the situation in which there is a single seller of a product (i.e., a good or service) for which there are no close substitutes. The word is derived from the Greek words monos (meaning one) and polein (meaning to sell). Governmental policy with regard to monopolies (e.g., permitting, prohibiting or regulating them) can have major effects not only on specific businesses and industries but also on the economy and society as a whole. Two Extreme Cases It can be useful when thinking about monopoly to look at two extreme cases. One is a pure monopoly, in which one company has complete control over the supply or sales of a product for which there are no good substitutes. The other is pure competition or perfect competition, a situation in which there are many sellers of identical, or virtually identical, products. There are various degrees of monopoly, and rarely does anything approaching pure monopoly exist. Thus, the term is generally used in a relative sense rather than an absolute one. For example, a company can still be considered a monopoly even if it faces competition from (1) a few relatively small scale suppliers of the same or similar product(s) or (2) somewhat different goods or services that can to some limited extent be substituted for the product(s) supplied by the monopolist. A business that produces multiple products can be considered a monopoly even if it has a monopoly with regard to only one of the products. ...
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...direct election of senators, which eventually became the seventeenth amendment of the Constitution: “The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof.” It also called to ratify state laws by passing initiatives and referendums, and grant unlimited coinage of silver to increase the money supply. The sixteenth amendment, which is a graduated income tax, was like the seventeenth amendment, which was proposed as part of this platform. The graduated income tax ensures that “the Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” In terms of monopolies, the Omaha platform called to even out the competition by allowing the public to own certain systems. Finally, it attempted to provide loans and warehouses to farmers, and limit laborers to eight-hour work days. This entire plan was extremely...
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