assignment指导|垄断与规制

assignment指导|垄断与规制

Monopolies and the legislation regulating them

 

垄断一个行业是有一个单一的供应商的产品或服务，换句话说，行业是公司，被称为纯粹的垄断。在垄断市场，需求曲线向下倾斜，这被称为行业需求曲线。这就意味着，如果一个垄断者想增加销量，就必须降低其价格，不能率的价格，消费者在市场上不承担。

因为垄断的市场有很高的进入壁垒，如专利、限制性定价、成本优势、广告和营销，等等的研究和发展，垄断企业享受的短期均衡和长期均衡的扩展，使超正常利润效益。然而这也导致收入分配的不平等在某种意义上说，一些利润会分散给股东作为股息，因此一些低收入消费者可能被利用，因为更高的价格和一些他们的购买力可能传达的高收入阶层使用的股息。这些超常的利润但是也可以注入的研究和开发项目，从而产生创新的产品，如果它要和整体生产的消费者，产品质量更好，例如，制药行业。另一方面，有一个垄断使损失以及发生的可能性，这在短期内如果销售价格低于产品的输出成本。

 

A monopoly is an industry where there is a single supplier of a product or service, in other words, the industry is the firm which is known as a pure monopoly. In a monopoly market the demand curve slopes downward which is known as the industry demand curve. This simply means that if a monopolist wants to increase sales, it must lower its prices, it cannot rate a price that consumers in the market will not bear.

 

Because monopoly markets have high barriers to entry, such as patents, limit pricing, cost advantages, advertising and marketing, research and development to name a few, monopolies enjoy the benefit of making super normal profits in the short run equilibrium and by extension in the long run equilibrium. This however can result in an unequal distribution of income in the sense that some profits will be dispersed to shareholders as dividends, thus some low income consumers may be exploited because of higher prices and some of their purchasing power may be conveyed using dividends in the higher income brackets. Some of these supernormal profits however can also be injected into research and development programmes, hence producing innovative products, if it wants to and overall producing a better quality product for consumers, for e.g., the pharmaceutical industry. On the other hand, there is a possibility for a monopoly to make losses as well, this transpires in the short run if the selling price is lower than the cost of the output of the product.

 

Depending on its size, a monopoly can achieve economies of scales, which is when the cost per unit falls as output increases. A monopolist will seek to maximize profits by setting output where MR=MC, and output is at Qm and Price Pm as illustrated below.

 

monopoly 垄断

 

Therefore, even if the total cost of production has risen, the cost per unit of production would fall, allowing increased profit margins to a monopolist by not reducing its MC, however still benefiting consumers since the cost is already low.

 

Some may argue though that because of the lack of rivalry, a monopolist can rather mislead consumers through innovation of ineffective or poor quality produced products. Additionally, because a substitute product is out ruled in cases of a monopoly market, it seeks to exploit consumers through setting high prices and lowering output levels contrary to perfect competition, subsequently, deriving at a downfall in consumer surplus and a deadweight welfare loss which leads to monopolies being allocatively inefficient. It is allocatively inefficient in the sense that price is greater than marginal cost (P>MC), whereas, in a competitive market, consumers would benefit through lower prices as shown on diagrams below through tutor2u:

 

Monopolies are also said to be productively inefficient because it is not producing output at the lowest point on the average cost curve (AC).

 

Another major disadvantage of a monopolist which may surface is the matter of price discrimination. Monopolies find it very profitable to charge different prices of different units of the same product. Yes a monopolist must lower its prices of products in order to increase sales; however, this would only occur in districts where the demand for the product is price elastic. Monopolists will never lower its prices below the middle of its demand curve where demand for the product is price inelastic; else its opportunity of achieving higher revenues will fall. A price discriminating monopolist is demonstrated, again via tutor2u, where P1, Q1 is price discriminating:

 

The United States of America were the first nation to undertake antitrust legislation and enforcement. Only since World War II, have other nations done the same. The Sherman Antitrust Act of 1890 (15 U.S.C.A § 1 etseq.) is the basis for antitrust law.

 

These are legislation sanctioned by the federal and various state governments to standardize trade and commerce by inhibiting unlawful restraints, price-fixing and monopolies in the effort to promote and protect competition in the market, and to encourage the production of quality goods and services available at the lowest prices to consumers, hence the fundamental goal of protecting public welfare through positive competition.

 

According to section 2 of Sherman Act (15 U.S.C), any person monopolizing, attempting to monopolize, or combine or conspire with any other person to monopolize any part of the trade or commerce among the several states, or with foreign nations, shall be deemed guilty of a felony and on conviction thereof, shall be punished by a fine not exceeding $10, 000, 000 in cases of a corporation, or if any other person, they would be fined $350 000 or by imprisonment not exceeding three years, or by both said punishments in the discretion of the court.

 

In conclusion, I agree that a monopoly can pose great number disbenefits in a market and to society as a whole, however I strongly believe that with a government’s permission, through patents, trademarks, copyrights and franchises, monopolies can be beneficial to society by creative production of products or services as well as providing financial incentives to local artists, writers, entrepreneurs, etc, something a firms operating in a competitive market may not be able to provide.