Thereis a lot of things to be concerned about in America, one of those thingsis the many monopolies happening in America, and howthey are ruining the economy.
For those who don’t know Monopoly is a situation in which asingle company owns all or nearly all or nearly all the market for a given type of product orservice. So, for example you would say to your friend; “The taco shops all around my area havereally soaring prices and he responds with “All of them are owned by the same owner.” Thatwould-be a form of Monopoly, there are many point of views for Monopoly depending whether it isgood or if it is bad.
Barry C. Lynn of theatlantic.com argues in their article; “America’sMonopolies Are Holding Back the Economy.” That “The effects of monopoly enrage voterstheir day to day lives, as they face thesky-high prices set by drug-company cartels andabusers cable providers, health insurers, and airlines. What they mean by this is that the owners ofall those things are just charging more for their services and making people spend more. They cando this even if there is high demand because basically the customer has no choice. This canalso happen with grocery stores whenthey raise the prices in poorer areas and they haveless options.
Monopolies also lose any encourage or motivation to innovate, they don’t needto have new products or improved products. In fact, A 2017 study by the Nation Bureauof economic research found that a lot of businesses in the U.S. have invested less in theirproducts/services, since 2000. Disruptive technology is the worst enemy of tv companies or cablecompanies’ monopoly because they don’t rely on cable to send tv shows or movies becauseit can do that straight threw digital.Firms also use tactics to establish monopoly power, sothey can drive potential competitors out of business. For example, a rich firm can set pricesbelow the cost of their competitors and take losses while the other business is not making anythingbecause that firm has lower prices and other firm is forced to close their doors because theycan’t afford to go lower and when the other firm is out of business the firm raises its pricesmore than if the market was competitive just so they can cover the losses they took while establishinga now dominant market position they have now.
Althoughthere is a lot of things bad with monopoly there is also times where is good oris necessary. It almost guarantees a consistentdelivery of product or service that has an excessive cost. Such as, dams and electric plants, because it isvery expensive to build new electric plants and dams because you must pay for various things such as,builders, workers, and repairs. The federal governments have regulated these industries toprotect the consumer so they don’t have to pay sky-high prices such as, the companies couldset prices to gain back what they lost for a reasonable profit as well.
There was muchtalk of deregulation in the 1990’s to of course allow competition which occurred in some cases.Another way that Monopoly that can be good for the economy is in research and developmentbecause they make exceptional profit, which can be used to fund high-cost capital investmentspending such as research. Then, from ‘that assuming successful research, can be used forimproved products and lower costs in the long term. This is especially important fortelecommunications and pharmaceuticals. So, without monopoly power basically means there without monopolythere may be less development of medical drugs because they can’t fund the research.
Also with developing drugs, there is a highrisk of failure because it’s a new drug and with monopolyprofits, they give a firm greater confidence because they have room for mistakes andfund research that may prove a failure.A lot of people say that there will be no competitionin monopoly but if a domestic firm may have monopoly power in the domestic country but faceeffective competition in global markets.With markets continuing to be increasingly globalized,it must be necessary for a firm to have domestic monopoly to be competitive internationally.There is another way that monopoly is useful and that is to avoid the duplication ofservices so if there are 4 bus companies in small 1 town, monopoly would fix it, sure some of the buscompanies would go out of business but it would be beneficial for the town and its people.
Thereare several infamous monopolies in the United States and what the monopolies caused the U.S. to do about them. The veryfirst monopoly in America was against the companies “International Harvester” and “AmericanTobacco”. “International Harvester”made cheap agricultural equipment for mostly anagrarian nation and was considered untouchable, and “American Tobacco” was accused ofcharging soaring prices for cigarettes andthey claimed that it was cure all to asthma tomenstrual cramps. The Sherman Antitrust Act passed in 1890 under the presidency of BenjaminHarrison, allowed certain business activities that federal government regulators deem tobe competitive, and recommended thefederal government toinvestigate and pursue trusts.
In the general sense, a trust is acenturies-old legal arrangement whereby oneparty conveys property to a trustee to hold for a beneficiary. The act also banned monopolisticcombination which gave the government a hammer to smash them.Still, over the next 50years more monopolies formed. “Standard Oil” showed the potential benefits of a monopoly.When there were several competitors, “Standard Oil” they used leaky pipes and pumped wasteinto the environment, but when “Standard oil” used some shady business tactics tomonopolize the industry, its size could let it take on other projects other OilCompanies could not.
Such as, helping build a reliable infrastructure, this helped change the United States into anindustrial nation. Other contributor is U.S. Steel which showed a Monopolies limitations.It did little with its vast resources yet controlled 70% of steel production, while other firms weremore efficient with they’re 30%. U.S.
Steel’s monopoly eventually, although they still wona court battle with the Sherman Act. In Conclusion, there are a lot of things to be concernedabout in America and how monopolies effectAmerica in good and bad also you have learned the history of Americas monopolies and how theyaffected U.S history. So far, the U.S has handled monopolies very welland hope they continueto regulate and help the consumer.