Economics Research Paper

            Economic marketplaces have two basic characteristics: monopoly and competition. Monarchy and rivalry are economic words that describe the complex connections that exist between businesses in a certain sector. A monopoly is defined as a company's complete ownership of a market for a particular product or item in which no competition exists. In this instance, the provider can fix the price of the product without fear of competition from other providers or alternative products. A monopolist is supposed to choose a price that maximizes profit. The techniques through which companies produce and sell their items have a significant influence on competitiveness. Different market structures, or market characteristics, dictate how sellers engage with anyone, how sellers connect with buyers, and so on in different industries. Three factors of marketplace improve the relative scenery: (1) the level of market share in a marketplace, (2) the quantity of product diversity, and (3) the ease or difficulty in which online vendors can enter the market. Though single-firm monopolies are uncommon, unless they are regulated by the government, it is useful to study the monopolist's market behavior and performance to set a benchmark that is the polar opposite of perfect competition. The monopolistic corporation can select any sale price as the exclusive provider of a product line, as long as it acknowledges the sales that correlate to that price. Given the link between manufacturing costs and output, market demand is typically negatively proportionate to rate, and the cartel would probably establish a price that yields the highest profits. By limiting output, the business may dramatically increase its selling price—an option unavailable to suppliers in individualist sectors (Brainn 2021).

            Because industrial performance varies according to market features, efforts have been undertaken to provide a realistic criterion for defining the types of market structures that result in socially acceptable performance in a specific industry. The phrase "workable competition" was coined to describe competition that leads to a fair or socially desirable estimate of optimal performance in a given industry's constraints. In a fact, the approximation's bounds are arguable, therefore the concept of practical competitiveness must stay elusive since it is fundamentally arbitrary. Without delving into a detailed theoretical explanation of the link between individual industry success and general welfare, the following key characteristics of feasible achievement in an industry are plausible: (1) Inside this long run, average selling prices should be identical higher than average manufacturing costs, so that earnings do not dramatically exceed a typical interest ROI. Prices should respond to cost reductions on a fundamental level (Shaikh, 2022). (2) Far as plant and company scales or capacities impact average production costs, the majority of industry revenue should come from the most efficient size or closely equivalent technological efficiency plants and companies. (3) There should be no chronic surplus capacity in the industry—that is, considerable plant capacity that is left idle even during periods of strong general economic activity. (4) Sales marketing expenditures in the sector should not be significantly more than what is required to keep customers informed about product availability, features, and prices. (5) The sector should be sufficiently progressive in adopting more cost-effective manufacturing procedures and improved goods, combining the expenses of advancement with the benefits. While the first three of these characteristics are easier to assess than others, certain generalizations about the workability of various market buildings are possible: (1) Unregulated single-firm oligarchies usually produce unworkable market performance, predominantly in the form of yield limitation, prices well above expenditures, and thus excess profits. They have unfavorable consequences for resource allocation and income distribution. (2) Oligopolies with great market structure and also very high entry barriers, such as single-firm monopolies, have unworkable efficiency. They do not, however, demonstrate high levels of technical inefficiency as a result of inefficient plant sizes or surplus capacity in general. (3) Oligopolies with a relatively high product variety but only modest entry obstacles are also prone to unsatisfactory behavior of the type described above, although to a lesser extent. (4) Oligopolies of only modest market share and modest entry barriers tend to have reasonable price-cost relations and technical efficiency, with the exception that many of them would have chronic surplus volume due to frequent Coventry by rival businesses. (5) Atomistic structure industries tend to have workable performance until they are subjected to destructive rivalry, as indicated previously.

            There is a trend for slight but notable percentages of earning to be dedicated to persuasive (as opposed to useful and informative) adverts and other product promotion, as well as to roughly idle different variants of product design, in industry sectors with significant product differentiation by many sellers—and notably in state monopolies of this sort—resulting in resources being "wasted" and costs being increased. According to the requirements of the viable competition, a completely rational society would probably prefer markets that have mid to low market structure, moderate to low entrance barriers, and little product differentiation, all for the sake of improving total material welfare. Based on facts, the idea that oligopoly and individuated enterprises require legislative protection from damaging competition may be dismissed. In such businesses, price and other forms of market warfare have been exceedingly unusual in industrialized nations.

            Vertical integration enables select companies can become a monopoly, controlling the entire supplier base from manufacture to distribution. Others use horizontal integration, which involves acquiring competition until only the last few people are left. When competitors have been removed and a monopoly has been established, the monopoly can hike costs to any degree it wants. If a new competitor tries to enter the marketplace, the monopolies can slash prices as low as they want to push people out. After competitors have been forced out, expenses may be reimbursed by increasing premiums. Microsoft was found to be an unlawful control by the United States District Law court in 1998. 3 It held a foremost lead as the software for personal processers, which it subjugated to fright a dealer, Intel. It also compelled computer manufacturers to keep back superior technologies. Microsoft was obligatory by the administration to disclose information about its software, letting rivals create new products based on the Desktop version. Disruptive technologies, on the other hand, have done more to weaken Microsoft's dominance than government interference. People are increasingly using mobile smartphones and tablets and cellphones, and Microsoft's computer system for these devices has not been well received. Many say that Google has a stronghold on the online search commercial, with moreover 90% of all queries going via it.

            The number of vendors in an industry, as well as their relative portions of industry sales, is referred to as seller concentration. When there are a large number of sellers and each seller's portion of the economy is so small that he cannot perceptibly impact the market share or revenue of any rival seller by adjusting his sales price or output, economists refer to this as atomistic competition A single-firm monopoly emerges when an individual firm supplies the full production of an industry and may thus set its selling price without regard for the reactions of competing sellers (Kotcofana et al., 2020).

            The degree to which market buyers prefer certain things over others influences the industry's organization. Purchasers in certain industries regard products to be the same, such as basic agriculture commodities (Amadeo, 2021). Others distinguish the products in some way, allowing different buyers to select different items. However, the parameters are subjective; customers' preferences, brands, and various styles may be presented in the following subsections rather than true differences in the objects. The degree of differentiation strategy, as defined by planning and business, ranges from minimal to large, with the biggest variety seen in rarely acquired consumer items and "glamour products," particularly those given as gifts. The ease with which new suppliers can enter certain industries differs. Entry barriers are the benefits that sellers that are already well-known in an industry have over newcomers. Existing vendors' ability to regularly raise current market prices above their bare-bones expenses without having to attract new sellers is one piece of evidence of this restriction. Obstacles may develop as a result of established vendors' cheaper expenditures than aspiring newcomers', or as a result of known sellers charging higher prices from buyers who prefer their wares to those of new entry. The sector's fundamentals may also mandate that new entrants must control a considerable percentage of the market before they can benefit. (Brain, 2021).

            If the tentative market equilibrium is high enough to make established sellers’ profits above a normal debt return on capital, new sellers will be attracted to the economy, and stockpile will raise until a new equilibrium rate is achieved that is equivalent to the minimum average production cost of all vendors. In contrast, if the temporary price level is so cheap that regular sellers lose money, some would leave the business, forcing supply to fall until a relatively long price level is found.

 

 

 

 

 

Amadeo, K. (2021, October 23). What Is a Monopoly? Retrieved from https://www.thebalance.com/monopoly-4-reasons-it-s-bad-and-its-history-3305945.

Brain, J. S. (2021, September 1). Monopoly and Competition. Retrieved from https://www.britannica.com/topic/monopoly-economics.

Kamerschen, D. R. (1976). The Economic Effects of Monopoly: A Lawyer's Guide to Antitrust Economics. Retrieved from https://digitalcommons.law.mercer.edu/cgi/viewcontent.cgi?article=1094&context=jour_mlr.

Kotcofana et al., (2020). The impact of monopolism on the stability of economic development in the conditions of globalization. Retrieved from https://www.shs-conferences.org/articles/shsconf/pdf/2020/02/shsconf_glob2020_06013.pdf.

Shaikh, S. (2022). Monopoly: Meaning and Kinds | Managerial Economics. Retrieved from https://www.economicsdiscussion.net/monopoly/monopoly-meaning-and-kinds-managerial-economics/13853.