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Monopolies
The word monopoly means one seller. A firm creates a monopoly by growing so much that it takes a large share of a certain market through takeovers or dominance. A monopoly is an economic situation in which one company or corporation is dominant in a particular market. It allows very little room for entries from other firms. A perfect example of a monopoly in today's society is the Microsoft Corporation. By being the only dominant in the field, the corporation is able to place their own standards and their own selling prices in the market. This can be a negative on the consumer society. Just like anything else, there are both pros and cons to having a monopoly in an economic society.
There are certain fundamentals a corporation must have that will cause a monopoly to be created. In order to create a monopoly in an industry, one must have the control of a major resource used to create the product and one must have the technological capabilities that will allow that corporation to produce as much output as necessary. Another cause of a monopoly is a natural monopoly, when cost of production declines. Therefore, the cost of production is so low, that the firm or corporation can produce enough products for the entire market and industry. A monopoly is also formed when it takes control of the market through the use of patents because they have control over the production of that product. There are also situations in which the government will grant a legal monopoly to a business with government awarded franchises and licenses.
Many arguments have been debated to find out whether a monopoly in a particular industr ...