Are monopolies ever acceptable?

Monopolies over a particular commodity, market or aspect of production are considered good or economically advisable in cases where free-market competition would be economically inefficient, the price to consumers should be regulated, or high risk and high entry costs inhibit initial investment in a necessary sector.

How could a company have a monopoly legally?

A legal monopoly refers to a company that is operating as a monopoly under a government mandate. A legal monopoly offers a specific product or service at a regulated price. It can either be independently run and government regulated, or both government-run and government regulated.

What is an example of a monopoly today?

Monopoly Example #1 – Railways Public services like the railways are provided by the government. Hence, they are a monopolist in the sense that new partners or privately held Companies are not allowed to run railways.

Are monopolies inevitable?

“Are monopolies inevitable?” No. A monopoly is defined as a firm which can restrict output and raise prices, thus earning “monopoly profits”. The problem being that any time any firm has ever done this, competitors see those “monopoly profits” and jump in to offer their products slightly cheaper.

Why is a monopoly inefficient?

Monopolies can become inefficient and less innovative over time because they do not have to compete with other producers in a marketplace. In the case of monopolies, abuse of power can lead to market failure. A monopoly is an imperfect market that restricts output in an attempt to maximize profit.

Why are some types of monopolies considered acceptable while others are not?

Why are some types of monopolies considered acceptable while others are not? because they must be fair to both the consumer and the seller. Some monopolies create illegal agreements which is why they are not acceptable. What flaws in a market system lead to market failures?

Are monopolies always inefficient?

Monopolies can become inefficient and less innovative over time because they do not have to compete with other producers in a marketplace. In the case of monopolies, abuse of power can lead to market failure.

What is the monopoly problem?

The most noted monopoly problem is inefficiency. Market control means that a monopoly charges a higher price and produces less output than would be achieved under perfect competition. In addition, and most indicative of inefficiency, the price charged by the monopoly is greater than the marginal cost of production.