Do Pure Monopolies Exist?
Pure monopoly is a scenario where one enterprise or individual controls the operations and activities in an entire market. A pure monopoly is characterised by lack f reliable competition in the production and distribution of services and goods in a given economy. However, based on the current market trend, pure monopoly does not exist. Instead, all firms in the modern market compete for the customers’ dollar (Beach, 2004).
Modern market and economy is characterised by endless competition between the existing competitors and new entrants into the economy. In the contemporary economy, there are always alternative products and services in the market. Recent studies affirm that there are limited business entities with the power and ability of producing a unique products and services that does not have a substitute. Modern economy is full of products of different types and quality. To prosper in the current economy, industries and other business entities need to produce high quality products that meet the needs of consumers.
Modern technology and globalisation are some of the factors that have hindered the existence of pure monopoly in the contemporary market. The use of the online services such as social media and online marketing website empowers the customers with the ability of buying products from other parts of the world. Therefore, the availability of various communication means has undermined the possibility of pure monopoly in the modern market. Moreover, globalisation has turned the world into a global village. Globalisation has integrated the global economic into one single unit with numerous actors. The existence of numerous actors in one huge economy has substituted the pure monopoly economy with a competitive market. All actors in the global village need to manufacture attractive products in order to attract and retain their customers.
The continuous global meeting and interaction among business executives and leaders have facilitated the sharing of ideas among the owners of the means of production. New ideas have been useful in enhancing the production of similar products hence undermining the chances for a pure monopolisation in the current market. The existence of various factors that determine the quality and prices of products have also undermined the pure monopoly systems. So far, a good number of modern administrations have some influence in the identification of the quality and prices of the produced products. The existence of policies and legislation that determines the quality of products in a given country has diluted the manufacturers’ ability of influencing the quality of their products and services.
International organisations and authorities have also been influential in determining the nature of the products that an organisation should produce in the global market. Moreover, government incentives and policies on the prices and quality of the products to be circulating in a given economy have also encouraged a competitive market. Government taxes and revenues on the produced products is another key factor that has denied modern producers the power of dominating their market (Guy, 2012).
The capital requirement is also a key factor that enhances the replacement of the conventional pure monopolies with competitive market. In most instances, the production of bulk products requires huge capital and resources. The cost of transporting produced market to huge market areas also requires a company that has large investment capital. Based on the recent researches few organisations have the ability of producing products and services that address the demands of the entire population. On the other hand, contemporary government have removed some of the barriers that hindered new entrants into the market. The elimination of the unnecessary barriers motivates numerous new investors into the market. The available of new entrants into the existing markets have been relatively influential in eliminating pure monopoly market.
Government incentives have also been useful in reducing the chances of market domination by a single business entity. The entrance of government in the production of critical products in the market has played a noticeable role in advancing the competitive market. In most of the modern states, the government take influential role in the manufacture of valuable products such as oil and electricity. The inclusion of the government in the modern economy is useful in ensuring that no single private organisation has an influence in the market. The government set prices for their products in order to reduce the possibility of price discriminations. The determination of the prices and quality of the products produced by government entities is determined by the market demand and the prices of the raw materials required in producing goods and services (Stigler, 2008).
Consequently, based on the available empirical evidence and market trend, there is not firm that is completely sheltered from its potential rivals. Modern market is characterised by endless competition for the available customers. The introduction of modern technology has played a critical role in facilitating the substitution of conventional pure monopoly economy with modern competitive market. The new competitive economy is relatively valuable in enhancing the advancement of the status of the products and services produced in the present economy. Therefore, the endless competition for the customers’ dollar in the modern economy has undermined the existence of pure monopoly market.
Beach, C. (2004). Monopoly: The New Student’s Reference Work. Chicago: F. E. Compton and Co
Guy A, (2012) Beyond Monopoly Capitalism and Monopoly Socialism. Cambridge, Massachusetts: Schenkman Publishers
Stigler, G. (2008). Monopoly, (2nd ed.). Indianapolis: Library of Economics and Liberty
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