pure monopoly 的好處and 壞處

pure monopoly 的好處and 壞處,

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  • 小東
    Lv 6
    1 十年前
    最愛解答

    Monopoly

    In economics, a monopoly (from the Latin word monopolium - Greek language monos, one + polein, to sell) is defined as a persistent market situation where there is only one provider of a product or service. Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.

    Monopoly and efficiency

    According to standard economic theory, a monopoly will sell a lower quantity of goods at a higher price than firms would in a purely competitive market. In this way the monopoly will secure monopoly profits by appropriating some or all of the consumer surplus: although the higher price deters some consumers from purchasing, most are willing to pay the higher price. Assuming that costs stay the same, this does not lead to an outcome that is inefficient in the sense of Pareto efficiency; no one could be made better off by shifting resources without making someone else worse off. However, overall social welfare declines, because some consumers must choose second-best products.

    It is often argued that monopolies tend to become less efficient and innovative over time, becoming "complacent giants", because they do not have to be efficient or innovative to compete in the marketplace. Sometimes this very loss of efficiency can raise a potential competitor's value enough to overcome market entry barriers, or provide incentive for research and investment into new alternatives. The theory of contestable markets argues that in some circumstances (private) monopolies are forced to behave as if there were competition because of the risk of losing their monopoly to new entrants. This is likely to happen where a market's barriers to entry are low. It might also be because of the availability in the longer term of substitutes in other markets. For example, a canal monopoly, while worth a great deal in the late eighteenth century United Kingdom, was worth much less in the late nineteenth century because of the introduction of railways as a substitute.

    Some argue that it can be good to allow a firm to attempt to monopolize a market, since practices such as dumping can benefit consumers in the short term; and once the firm grows too big, it can be dealt with via regulation. When monopolies are not broken through the open market, often a government will step in, either to regulate the monopoly, turn it into a publicly owned monopoly, or forcibly break it up (see Antitrust law). Public utilities, often being natural monopolies and less susceptible to efficient breakup, are often strongly regulated or publicly owned. AT&T and Standard Oil are debatable examples of the breakup of a private monopoly. When AT&T was broken up into the "Baby Bell" components, MCI, Sprint, and other companies were able to compete effectively in the long distance phone market and began to take phone traffic from the less efficient AT&T.

    The mathematician Harold Hotelling came up with Hotelling's law which showed that there exist cases where monopoly has advantages for the consumer. If there is a beach where customers are distributed evenly along it, an entrepreneur setting up an ice cream stand would naturally place it in the middle of the beach. A competing ice cream seller would do best to place his competing ice cream stand next to it to gain half the market share, but two stalls right next to each other is not an ideal situation for the people on the beach. A monopolist who owns both stalls on the other hand, would distribute his ice cream stalls some distance apart.

  • wu
    Lv 6
    1 十年前

    Monopolist is the SOLE supplier and potential supplier of the industry’s product

    It is a PRICE SEARCHER that it can choose its own price.

    When a firm is a monopoly is a monopoly, it is facing a DOWNWARD SLOPPING DEMAND CURVE and makes decision without considering the reactions of other firms. The seller have influence the market price by his own individual action. At such, he does not face any given price, but has to decide (or find) which price to charge. The goods sold is heterogeneous (unique) goods from the point of view of the buyers. Hence, even if he sets a higher price, the quantity demanded from him will drop, but not drop to zero. There is a ENTRY BARRIER in entering into the market. IMPERFECT INFORMATION – the seller starts product with a given level of information of the market. No seller is fully aware of the price, quantity, and quality of goods sold by each and every seller, e.g. information is imperfect and sellers has to incur a cost in finding information.

    資料來源: adms micro
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