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The State of Monopolies in The USA

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Words: 1100 |

Pages: 2|

6 min read

Published: Dec 5, 2018

Words: 1100|Pages: 2|6 min read

Published: Dec 5, 2018

There is a lot of things to be concerned about in America, one of those things is the many monopolies happening in America, and how they are ruining the economy. For those who don’t know Monopoly is a situation in which a single company owns all or nearly all or nearly all the market for a given type of product or service. So, for example you would say to your friend; “The taco shops all around my area have really soaring prices and he responds with “All of them are owned by the same owner.” That would-be a form of Monopoly, there are many point of views for Monopoly depending whether it is good or if it is bad. Barry C. Lynn of theatlantic.com argues in their article; “America’s Monopolies Are Holding Back the Economy.” That “The effects of monopoly enrage voters their day to day lives, as they face the sky-high prices set by drug-company cartels and abusers cable providers, health insurers, and airlines. What they mean by this is that the owners of all those things are just charging more for their services and making people spend more. They can do this even if there is high demand because basically the customer has no choice. This can also happen with grocery stores when they raise the prices in poorer areas and they have less options. Monopolies also lose any encourage or motivation to innovate, they don’t need to have new products or improved products. In fact, A 2017 study by the Nation Bureau of economic research found that a lot of businesses in the U.S. have invested less in their products/services, since 2000. Disruptive technology is the worst enemy of tv companies or cable companies’ monopoly because they don’t rely on cable to send tv shows or movies because it can do that straight threw digital. Firms also use tactics to establish monopoly power, so they can drive potential competitors out of business. For example, a rich firm can set prices below the cost of their competitors and take losses while the other business is not making anything because that firm has lower prices and other firm is forced to close their doors because they can’t afford to go lower and when the other firm is out of business the firm raises its prices more than if the market was competitive just so they can cover the losses they took while establishing a now dominant market position they have now.

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Although there is a lot of things bad with monopoly there is also times where is good or is necessary. It almost guarantees a consistent delivery of product or service that has an excessive cost. Such as, dams and electric plants, because it is very 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 to protect the consumer so they don’t have to pay sky-high prices such as, the companies could set prices to gain back what they lost for a reasonable profit as well. There was much talk 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 development because they make exceptional profit, which can be used to fund high-cost capital investment spending such as research. Then, from ‘that assuming successful research, can be used for improved products and lower costs in the long term. This is especially important for telecommunications and pharmaceuticals. So, without monopoly power basically means there without monopoly there may be less development of medical drugs because they can’t fund the research. Also with developing drugs, there is a high risk of failure because it’s a new drug and with monopoly profits, they give a firm greater confidence because they have room for mistakes and fund research that may prove a failure. A lot of people say that there will be no competition in monopoly but if a domestic firm may have monopoly power in the domestic country but face effective 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 of services so if there are 4 bus companies in small 1 town, monopoly would fix it, sure some of the bus companies would go out of business but it would be beneficial for the town and its people.

There are several infamous monopolies in the United States and what the monopolies caused the U.S. to do about them. The very first monopoly in America was against the companies “International Harvester” and “American Tobacco”. “International Harvester” made cheap agricultural equipment for mostly an agrarian nation and was considered untouchable, and “American Tobacco” was accused of charging soaring prices for cigarettes and they claimed that it was cure all to asthma to menstrual cramps. The Sherman Antitrust Act passed in 1890 under the presidency of Benjamin Harrison, allowed certain business activities   that federal government regulators deem to be competitive, and recommended the federal government to investigate and pursue trusts. In the general sense, a trust is a centuries-old legal arrangement whereby one party conveys property to a trustee to hold for a beneficiary. The act also banned monopolistic combination which gave the government a hammer to smash them. Still, over the next 50 years 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 waste into the environment, but when “Standard oil” used some shady business tactics to monopolize the industry, its size could let it take on other projects other Oil Companies could not. Such as, helping build a reliable infrastructure, this helped change the United States into an industrial nation. Other contributor is U.S. Steel which showed a Monopolies limitation. It did little with its vast resources yet controlled 70% of steel production, while other firms were more efficient with they’re 30%. U.S. Steel’s monopoly eventually, although they still won a court battle with the Sherman Act.

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In Conclusion, there are a lot of things to be concerned about in America and how monopolies effect America in good and bad also you have learned the history of Americas monopolies and how they affected U.S history. So far, the U.S has handled monopolies very well and hope they continue to regulate and help the consumer.

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The State of Monopolies in the Usa. (2018, December 03). GradesFixer. Retrieved April 13, 2024, from https://gradesfixer.com/free-essay-examples/the-state-of-monopolies-in-the-usa/
“The State of Monopolies in the Usa.” GradesFixer, 03 Dec. 2018, gradesfixer.com/free-essay-examples/the-state-of-monopolies-in-the-usa/
The State of Monopolies in the Usa. [online]. Available at: <https://gradesfixer.com/free-essay-examples/the-state-of-monopolies-in-the-usa/> [Accessed 13 Apr. 2024].
The State of Monopolies in the Usa [Internet]. GradesFixer. 2018 Dec 03 [cited 2024 Apr 13]. Available from: https://gradesfixer.com/free-essay-examples/the-state-of-monopolies-in-the-usa/
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