Monopolies

Topics: Monopoly, Economics, Regulation Pages: 2 (487 words) Published: February 18, 2013
A monopoly exists when it has total control over a particular market and controls the supply and demand for that particular good or service. An oligopoly is a structure of a market in which only a few companies own or control the industry There are natural monopolies in the economy as well which are necessary to keep the economy progressing. Oligopolies exist because of the control over the supply of a good or service is in the hands of only a select few. They can influence the prices as well as the competition. The first monopolies began over discrepancies over natural resources. Before there was government regulation the resources that were once widely available to the population were controlled by the likes of elite, rich men. These conflicts over natural resources caused the government to regulate the resources by gathering and distributing them to the public. This regulation was put into place to reduce aggression between the company and the customers while balancing the supply and demand through different companies. Natural monopolies, on the other hand, do exist. These natural monopolies are those that have been in place for a long time and cannot be easily replaced. An example of these monopolies is a public utility such as water or electric service. It is much more costly to use multiple companies for a utility is much more costly as a whole than allowing the monopoly to continue. Waterlines and electrical towers that have been built and maintained for years would be difficult to destroy or remove from the land. In an oligopoly market, the companies set the prices and work together to control the markets to block new competitors from entering the market. The way these companies compete is through advertising and campaigns to get the most loyalty from the public. By using one another they can create supply and demand for their product or service. With government regulation these few powers can also be controlled like a monopoly would be....
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