Wonks
It is the opinion of this author that equilibrium and efficiency are the ideal aim of corporations in the marketplace because it provides them with opportunity to maximize their profits over the long-term. While it may not necessarily provide for higher than normal profits at all times. While it does for the companies in the competitive marketplace to stay in the game. Having the ability to decide price and preempt market spikes and dips distinguishes nearly perfect competitive markets from monopolistic and monopoly types. In a perfectly competitive and efficient market, prices, choice, quality and customer service is driven by the consumer. This will mean that each item produced by the firm will exhibit prices that are determined by the market which. This will in turn tell the company how much product needs to be produced in order to facilitate equilibrium in the marketplace. Just as most students in their first year of economics learn that monopolies are tough on the infrastructure of the marketplace, they learn as well that moving towards marketplace equilibrium is the driving goal of firms in the market. This is something which can only be achieved through the efficiency of a perfectly competitive market.
John Rockefeller once said tongue in cheek that "competition is a sin (Allen, 1976)." For the pioneer of monopoly capital, he knew exactly what would benefit him, namely getting rid of his competition. The question of monopolistic competition and who benefits depends on the perspective of each stakeholder. Nickel found in his study that increased competition "is associated with a significantly higher rate of total factor productivity growth (Nickell, 1996, 724)."
Given that the new Wonks company is now run as a monopoly, how will this benefit the stakeholders involved, how will this affect government, business and consumers. Given the transition from a monopolistically competitive firm to an outright monopoly, what will be the changes with regard to prices and output in both of these market structures? What market structure is more beneficial for Wonks to operate in, and will this be the same market structure that will benefit consumers?
In the opinion of the author, monopoly, especially outright monopoly, is more advantageous to the stockholders and company management in terms of profits and stability. The consumer is the loser in terms of price, choice, quality and customer service and satisfaction. Some, like the government swing in between depending on which of the previous groups is group is in ascendancy. Fortunately for the consumer, in the United States the laws against monopoly combinations (while not perfect mitigate this to some degree. Fortunately for the consumer, there are other smart lawyers out there fighting for their interest who will represent them in court, as we also see in this essay. Such attorneys would usually file a complaint with the Antitrust Division of the United States Justice Department claiming that Wonks had monopolized the potato chip industry. If Justice concurs, they may prepare or at least threaten a civil suit. They might also file a complaint with the Commerce Department or the Interstate Commerce Commission (Gilligan, Marshall, & Weingast, 1987, 1-2) .
Economists have traditionally assumed a number of different buyers and sellers as stakeholders in any given marketplace. This means that there is competition in the market. Therefore, this allows prices to change in response to variations in supply and demand. Also, for just about every product there exist substitutes. In other words, if one product becomes prohibitively expensive, then a buyer can choose cheaper substitutes instead. In a highly competitive market with many buyers and sellers, both consumer and supplier retain an equal ability to influence price. Monopoly constitutes a market situation in which there is only a single seller and very large number of buyers. As opposed to this, monopolistic competition is a market situation where there are a large number of sellers and large no. Of buyers. If there is over 80%, this indicates an extremely high level of concentration with 100% being a pure monopoly Case, Fair, & Osteer, 2009, 289.
There is salient historical in recent memory that provides an excellent example: Microsoft during the 1990s. If one examines this, they will find a company that maintained a stranglehold on the software market with their market dominating Windows operating systems. The Microsoft Corporation continually came out with new operating systems during this period, however none of the subsequent programs were largely superior to the previous...
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