The Role of Monopolies in an Economy Economics Essay Sample

Monopolies have impacted our country greatly. A monopoly is an exclusive or control of a supply or service. Monopolies happen when businesses want full control on a market of service of it pleasure. Monopolies have affected the economy, been abused by politicians, and have restricted smaller businesses. Research has shown even though monopolies are illegal, they are still operating. All monopolies should be monitored more strictly by the federal government.

Monopolies have a great impact in the economy.  The bigger businesses buying or running smaller businesses out of business, they have an unfair advantage. “In the late nineteenth-century, large monopolist like Standard Oil gained a notorious reputation for abusing their power and forcing rivals out of business. This led to a backlash against monopolists. But, in the Twenty-First Century, there are new monopolies which have an increasing influence on people’s lives” ( www.economicshelp.org ). This is an older example of monopolies, but this is one of the first big form of it that will start the monopolies we have today.

The monopiles have put a regulation on small businesses that don’t have much money to benefit them self. “Despite the prevalence of small businesses, the Chamber Foundation’s review of the literature finds that federal regulations and their infrastructure are growing and have a disproportionate impact on small business and free enterprise in America. Federal regulations alone are estimated to cost the American economy as much as $1.9 trillion a year in direct costs, lost productivity, and higher prices. The costs to smaller businesses with 50 employees or fewer are nearly 20% higher than the average for all firms” ( www.uschamberfoundation.org). Small businesses are hurting due to big businesses making all other businesses have to follow regulations that they took advantage of. It does not help these regulations, laws, ect are making people not want to start a business.

Monopolies have an unfair advantage in the government/political platform. monopoly companies have a lot more leeway to get laws in there favors. “The more extra money you have, the more lobbying you can do. Very profitable companies find it much easier to get laws and regulations passed that benefit them than less profitable ones do, and even less profitable companies get their way from lawmakers and regulators more often than the public does” (www.eff.org). this puts small businesses at a big disadvantage. Bigger businesses can use this to overpower small businesses to have to close their doors.

Companies still try to create a monopolized market and break the laws. Big monopoly companies push the limits of is a monopoly and not one. “The antitrust laws prohibit conduct by a single firm that unreasonably restrains competition by creating or maintaining monopoly power. Most Section 2 claims involve the conduct of a firm with a leading market position, although Section 2 of the Sherman Act also bans attempts to monopolize and conspiracies to monopolize” (www.ftc.gov). The companies can find a way too bend this by advertising more goods and services to not look like they have a monopoly. This law does have a big fine if caught going against it.” The Sherman Act imposes criminal penalties of up to $100 million for a corporation and $1 million for an individual, along with up to 10 years in prison. Under federal law, the maximum fine may be increased to twice the amount the conspirators gained from the illegal acts or twice the money lost by the victims of the crime, if either of those amounts is over $100 million” (www.ftc.gov). Some big companies wanting a monopoly to get discouraged when they learn these laws and don’t perform monopolies.

Microsoft had a big monopoly on the software field. Even tough Microsoft did not take over all ways of competing they did prevent rivals. “Microsoft illegally maintained its operating systems monopoly by including Internet Explorer, the Microsoft Internet browser, with every copy of its Windows operating system software sold to computer makers and making it technically difficult not to use its browser or to use a non-Microsoft browser. Microsoft also granted free licenses or rebates to use its software, which discouraged other software developers from promoting a non-Microsoft browser or developing other software based on that browser. These actions hampered efforts by computer makers to use or promote competing browsers and discouraged the development of add-on software that was compatible with non-Microsoft browsers” (www.ftc.gov). It is not 100 percent certain that Microsoft intended this, but they were trying to be the best to overpower everyone else in that field. 

Yes, monopolies have benefits for consumers, companies to be international, higher profits, and more. “If the firms produce in an industry with very high fixed costs (e.g., steel production), consumers can benefit from having a large firm which can exploit economies of scale. Economies of scale lead to lower long-run average costs and therefore give the potential of lower prices” (www.economicshelp.org). one firm would have one fixed cost and have a natural monopoly. 2 or 3 firms would keep enough competition with each firm to keep cost lower. Monopolies also help the companies be more international. “A domestic monopoly may face international competition; therefore, it still faces incentives to cut costs and be efficient. However, it can also benefit from economies of scale” (www.economicshelp.org). this helps big companies get overseas to sell their goods or services.

Monopolies are one of the economies big problems, due to companies wanting all the business. These companies are breaking laws and some of them like Microsoft and didn’t face really any repercussions. More regulations should be placed on these companies and not on smaller businesses until they get to that point of wanting all the business. Also, the political aspect should be monitored a lot more and a fair trial of these companies, and not do it for the money or votes. The Federal Trade Commission does try to stop these monopolies to protect American consumers. However, this does not stop monopolies from happening.