Research Paper on Monopoly

Introduction

Unlike other economic models where there is perfect competition and the players in the market are many, a monopolistic market is dominated by one industry. A monopoly can exist as a result of an extremely free market where one company can become large enough and own almost the entire market (Sherman 27). The market condition can also be as a result of government control where it takes over the running of a corporation and does not allow other people to enter into the business. A monopolistic market can either be virtual or pure. A market that is monopolistic may experience a low quality of products or service because of lack of competition. The company that controls the market may also have outdated methods of production of poor customer care service since the customers lack an alternative. However, the company may experience high growth and revenues because they set and decide the prices.

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

Anti-Trust Laws

Since the government understands the dangers of having companies that control the market without competitions, they have set laws that govern the corporations known as the "antitrust laws." Companies are expected to adhere to these laws to ensure they do not violate the principle of competition (Steiner 12). Antitrust laws are aimed at preventing any collusive behaviors or create a cartel that may hinder trade. Additionally, the laws are meant to ensure companies do not get into a merger with the intention of reducing competition in the market. Finally, the laws ensure corporations do not collude to form a monopoly or use their powers in the wrong way (Machado, 2015). Antitrust laws are therefore a critical component in the market that safeguards consumers against exploitation.

Part 2 - Text

One of the good examples where monopoly plays a critical role is when a customer tries to buy Lada a Russian made car. The car has a reputation for low quality yet customers are willing to buy it. Since the market had been monopolized, customers were willing to wait for an extended period to get their cars (Wheelan 81). The clients had been made less innovative and accepted the vehicles that were being offered. People could wait for two years to get the cars, yet they had other options. Lack of competition for many years had made the customers accept whatever was offered while making the manufacturers of the vehicles reluctant to innovate and come up with better cars. As the US and Japanese fought for a market share, the soviet gave Lada a leeway way to produce whatever they wanted.

Other instances where monopoly plays a critical role is in the renovations and construction of infrastructures. Usually, the government designs and funds the projects such as roads and bridge building. However, there are other times that the government advertise tender and invite private stakeholders to invest in the project. The government employees do not have to be the one doing the work, but they supervise the job (Wheelan 85). However, the work has to be at par with international standards. There is a need to have transparency if the public is to trust the public sector and the government to work together. The cost of production for the infrastructure should be minimized while the quality remains high. By inviting the private sector to participate in these projects, the government will be able to provide public service while gets funds from individuals or corporations.

Part 3 - Application

Unilever is one of the biggest companies in the world. It deals with consumer goods and has bought up many small companies that produce these goods. The company enjoys a monopoly of services and products and can attract a significant market share. The company owns more than 400 brands such as the Lipton, Persil, Becel, and Magnum (Taylor). In 2013, the company made a net profit of $5 billion. The organization can attract investors because of the attractive revenues and expand in many curries. Currently, it operates in more than 50 countries. The company can control the pricing of its products and compete with other retailers because it has an advantage of production. The low cost of productions allows the company to offer low prices, therefore, staying ahead of the curve. Unfortunately, the monopolistic nature of the company has meant that the company does not concentrate on innovation. The market has to accept whatever the company decides. The company does not make a lot of effort in ensuring its ingredients or quality is high (Taylor). The primary drivers of sales for this company are its packaging, brand name and the ability to have prices that other competitors may find difficult to compete. The monopoly of Unilever is therefore suitable for the investors but bad for the consumer. The company sacrifices quality and innovation for profits. However, since the purchasing power of many people is not high, and the alternatives are expensive, people are forced to buy products from the company.

Example of a Personal Experience

The monopoly nature of companies and how they treat their customers occurred to me when I was using a public transport system to run my errands. Since I did not have a car, I decided my options were a taxi or use a bus. I chose the bus because it is cheaper than the taxi. However, the monopolistic nature of the bus service was obvious with the way they treated the customers. First, the driver was always in a grumpy mood and did not bother answering greetings most of the time. The attitude was almost like what one gets at some government institutions where employees make no effort to be nice. The drivers I believe knew people who used their services had little options regarding their transportation and did not make any effort to retain the customers. The customer care of these buses was also rude or sometimes acted in a way that showed no interest towards the customers. The customer care never acted upon the complaints because the drivers exhibited the same behavior. Their attitude was also rude with most of them acting like nothing mattered. Some drivers were also late in their routes and never cared to respond if you asked them why they come late. The service was unreliable and difficult to use when one was in a hurry. I believe that if the transport system had competition, the drivers would be friendlier and put an effort to retain their customers. The trend is evident in taxi business where most taxi and Uber drivers make an effort to be nice to clients because they know there is competition for the service and clients have alternatives.

Works Cited

Machado, Arthur P. "Corruption and Monopolies -- An Endemic Problem." Forbes, 20 July 2015, p. 1.

Sherman, Roger. The Regulation of Monopoly. 4th ed., Cambridge Univ. P, 2001.

Steiner, Mark. Economics in Antitrust Policy: Freedom to Contract Vs. Freedom to Compete. Dissertation.com, 2007.

Taylort, Kate. "These 10 Companies Control Everything You Buy." The Independent, 4 Apr. 2017, www.independent.co.uk/life-style/companies-control-everything-you-buy-kelloggs-nestle-unilever-a7666731.html. Accessed 31 May 2018.

WHEELAN, CHARLES. Naked Economics: Undressing the Dismal Science. 3rd ed., W W NORTON, 2019.