At Google's peak success, one could argue that it almost had a monopoly on search engine digital ad revenue. During this time, Google made an extreme amount of money. However, this money was used to fund other initiatives, one being self-driving cars. If Google was in a more competitive environment, it may not have had the money to invest in this type of innovation. This begs us to ask the question: is innovation important even at the consumer's expense? Just food for thought...
In addition, monopolies have less duplication of resources. In other words, monopolies are far more efficient because there aren't other companies out there duplicating the resources needed, such as in a perfectly competitive market. For example, instead of having multiple cell phone providers in a town who each have their own cell phone signal transmitters, a monopoly would reduce the number of these signal transmitters to provide cell service to the entire town. Ultimately, although monopolies are mostly bad, they do have a few benefits to the consumer.http://www.economicsguide.me/?page_id=1044
This raises an interesting question about what the benefits of certain monopolies could be. For example, some local monopolies are not as detrimental as others because having multiple companies would be inefficient, like the example about cell phone providers you mentioned. However, there are also definitely some monopolies that have more negative effects than positive because they drive up prices, produce too little, and slow innovation. How can we tell the differences between these types of monopolies? Are some monopolies inherently better than others?
ReplyDeleteThough monopolies clearly offer some benefits, like self-driving cars (innovation) and cell phone providers as you mentioned, I think that it comes down to just how beneficial these benefits are. This is because monopolies will always have certain "bad" characteristics, such as setting high prices and producing too little. For example, do we really need self-driving cars? If the answer is no, then how beneficial are these monopolies really?
ReplyDeleteI agree with the comments above. It most definitely depends on the kind of monopoly and the pros/cons of a specific monopoly. Any market will have its possible benefits and consequences, it just depends on the situation, where the market is being applied to, and if the good things are weighing out the bad things.
ReplyDeleteThis article made me reflect on whether I think monopolies benefit me, as a customer. I do think that many companies that are monopolized make things more efficient for me. I'm grateful for the products that Apple and Google have produced. However, with looking at Apple there are definitely products that are just as good as their and are much cheaper; however, with their brand they are able to raise prices extremely high. I agree that I think it depends on the situation for the monopoly, but overall if the company has the power, they will raise prices and make it less accessible as a customer to match their high prices.
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