Show
What are the advantages and disadvantages of monopolies? Monopolies are firms who dominate the market. Either a pure monopoly with 100% market share or a firm with monopoly power (more than 25%) A monopoly tends to set higher prices than a competitive market leading to lower consumer surplus. However, on the other hand, monopolies can benefit from economies of scale leading to lower average costs, which can, in theory, be passed on to consumers.
Disadvantages of monopolies
In the late nineteenth-century, large monopolist like Standard Oil gained a notorious reputation for abusing their power and forcing rivals out of business. This led to a backlash against monopolists. But, in the Twenty-First Century, there are new monopolies which have an increasing influence on people’s lives. For more detail see: Disadvantages of Monopoly Monopoly Diagram
Inefficiency of monopoly
Advantages of monopolies
Evaluation of pros and cons of monopolies
Advantages of being a monopoly for a firmFirms benefit from monopoly power because:
Why governments may tolerate monopolies
See also: Advantages of Monopolies |