Monopolies and perfect competition in economic markets

Economic Concepts -- Monopolies and Perfect Competition

Monopolies and Perfect Competition

In principle, monopolies and perfect competition scenarios represent the opposite ends of the spectrum of economic environments. A monopoly is a situation where one company or entity maintains exclusive ownership or control over a commodity or service without any competition from other companies or entities. Conversely, perfect competition describes a situation where competitive entities can enter a particular market by choice and where the price that all market competitors can charge for their goods or services is determined by market demand. This is a fundamentally different situation from a monopoly because monopolies enjoy exclusive control over the goods or services they provide and may set their prices without regard for competition because none exists.

Generally, monopolies exist where a single organization or entity owns the only property or other potential source of revenue, either because there exists only one source of those commodities or because the price of entry into the market is so great that it operates as a barrier to other entities to do so even though they could, in theory. Conditions conducive to perfect competition exists wherever there are unlimited sources of the goods or services and where entry into the market is essentially open to any entity that wishes to do so.

Examples of Monopolies

In contemporary American society, the principal source of monopolies is the legal protections afforded under patent and trademark laws. In that regard, pharmaceutical companies routinely rely on the monopolies guaranteed for specific periods of time by patent rights to maintain monopolies over their drugs. Likewise, the trademark rights granted for the phrase "Let's get ready to rumble" established a legal monopoly on the commercial use of that phrase owned by the individual who first began using it to introduce professional fighters in competition.

Applying Saint Leo University Core Values to Economic Markets

In principle, the core values of Saint Leo University (and of Christianity, more generally) require us to be morally and socially responsible members of the human community. Furthermore, those core values also require us to serve our communities, to contribute to their strength, to be honest and virtuous in our thoughts and deeds, and to appreciate the abundance of resources provided to all of us by our Creator. Therefore, most monopolistic markets are fundamentally incompatible with those ideals, except perhaps where they are genuinely earned by very hard work (such as in the case of patents generated by long arduous processes and significant financial investment). Generally, our values are more consistent with competing fairly with others and they are inconsistent with exploiting the luck of circumstantial access to scarce resources or good fortune. Our values require us to focus on service and on giving back to our communities rather than to personal profit from ruthless or exclusionary opportunities.