Monopolies Vs. Competition

Paper Summary:

The paper relates that market structures vary in degrees of competition, from a monopoly or a single supplier in the market to an oligopoly where there are a few competing firms. The paper considers the argument of proponents of government regulation that the government has a responsibility to ensure the market is competitive. The paper disputes this by illustrating what happened to monopolies such as Microsoft, IBM and the airline industry. The paper maintains that the government should not interfere with market structures.

From the Paper:

"In a perfectly competitive market, price is determined by the true forces of market supply and demand; the seller can only control the quantity of goods it produces. In the long run, the firm maximizes profit or minimizes loss by producing the output where marginal revenue equals marginal cost. A competitive firm's marginal revenue is the given market price. However, barriers to entry (i.e. legal, sociological, natural, technology factors) prevent perfect competition and create alternative market structures, namely monopolies, oligopolies and monopolistic competition as summarized in Figure 1."

Sample of Sources Used:

• "America's Airlines, Flying on Empty (2005, September 6). The Economist. 6 Sept. 2005.
• Conigliaro, A., Elman, J., Schreiber, J. and Small, T. "The Danger of Corporate Monopolies." http://cse.stanford.edu/class/cs201/Projects/corporate-monopolies/index.html
• Micro. http://library.thinkquest.org/C004323/low/micro2.html

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