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21 September, 07:00

Describes how a monopoly controls an industry

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  1. 21 September, 08:56
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    Key ideas:

    A single entity controls the flow of the product. Possesses the power to limit prices. Will have some influence in politics. Difficult for new companies to enter the market.

    Explanation:

    Monopoly refers to the state when there is only one company controlling the flow of products, therefore controlling the prices of it. There are a lot of examples of monopoly in the contemporary era such as AB Inbev, but it doesn't mean that it is totally a modern concept. Monopoly existed even in history take for example the case of Carnegie steel mills or the issue of railroads.

    When one company possess such power that it can control the price, it can badly damages the interest of other investors and consumers. But the reason they create a monopoly is that they have heavy influence in politics. That is how they turn up the decisions to their own benefits. And monopolies always try to create hurdles for new investors to get in the market. Because they are charging whatever they want due to no competition, as soon as new competition arrive it will challenge the monopoly which it can't take.
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