How does a corporate monopoly impact competition?

Answer 1

Monopolies harm the economy because the products of the monopoly can be inferior and because it restricts free trade. also, it makes it nearly impossibe for a small business in the same industry to be successfull because the monopoly's prices are usually lower than is possible for a small business to set without losing money.

Answer 2

A monopoly can have several positive and negative impacts on the economy:

• Create jobs with relatively high salary
• Research and development leads to advance in technology (since monopoly has more funds than other companies)
• Able to exploit economies of scale (due to large scale production being a monopoly) => low average unit cost.

Negative impacts:

• High probability for the firm to charge a higher price (since there are no competitors; monopolies are price makers)
• Act inefficiently (don't have a fear of being competed out of the economy)
• Huge negative externalities especially on environments.

Generally, monopoly are observed to have negative impacts on a country's economy, justifying the creation of anti-trust laws (to break up the monopoly.)

Answer 3

A monopoly decreases the amount of competition.

Answer 4

In a true monopoly there is no competition.