The Monopoly and It's Impact on Life

Why are there Monopolies?

         Monopolies can form from many different factors. Some of them being a company's buyout of other smaller companies, thus eliminating competition and allowing them to be a monopoly. There are laws between buy outs of companies called antitrust laws, and some deals do not go through as the laws protect against forming monopolies because of unfair competition. One company could also simply be more efficient than their competitor, which in turn usually allows them to sell the product cheaper than their competitors can. In some industries monopolies can come about from barriers that prevent new companies from becoming a part of that market. Such barriers include licenses they have to have in order to make the product, or patents that prevent them from being able to make a particular product. A monopoly might also come about from their obtaining of materials required to make the product that can't be gotten elsewhere. It is almost natural for companies to become monopolies. When there are a large amount of companies in an industry it makes competition extremely tight, and when one company lowers their price, the others are almost forced to in order to stay alive. In this way prices keep dropping until they can not take it anymore and have to merge with other companies to keep growing. The other smaller companies now need to become bigger in order to compete, and thus the process of companies growing larger and larger begins, sometimes ending the process with a monopoly. Companies sometimes even strive to become monopolies, as some think with Microsoft, in order to become a highly profitable business. They seek to hunt down the competition and take them out.

Who are considered Monopolies?


Last Updated January 31, 2002