Industry Is Accused of Being

¶ … industry is accused of being a monopoly in a certain area of the market have been in the news often in recent years; Microsoft was accused of being a monopoly in the computer processor industry, and the media empires of a few companies who own television, magazine, and newspaper sources have been accused of monopolizing these areas of the media. However, these accusations are not something that is new to the twenty first century, or even the latter part of the twentieth century after the technology boom. In fact, large corporations have been accused of monopolizing a field for decades, notably the government-mandated divisions of the Bell System telecommunications provider. Many nations today hold monopolies on certain resources, especially oil. The commodity of salt, commonly used as currency in ancient times, was one of the first resources to be monopolized (Bloch 1996). Essentially, monopolies have existed since economies have; they continue to exist globally and can provide a stable business environment for their business owners (or the government, in the case of public monopolies).

A pure monopoly, one in which a single entity is the only producer of a product or provider of a service, allows that provider to set most, if not all, boundaries on their products (Boardman and Vining 1989). Regulations concerning all aspects of the production or provision of that product are difficult to establish from outside of the industry, which consists of only the one firm, pricing is completely at the discretion of the firm, and aspects of marketing and management have no other standard of comparison from other firms. Monopolistic competition exists in some industries; this type of situation is defined as one in which one firm dominates the industry so completely as to behave similar to a monopoly. A recent example of this is the antitrust actions taken against software giant Microsoft; although there were no legal barriers to competition in that field, Microsoft's dominance was so pervasive as to construct other barriers to the entry of new firms (Cusumano and Selby 1995).

Similar to instances of monopolistic competition, oligopolies consist of a small group of industry leaders dominating a market. One example of this is the oil industry, in which a small group of huge corporations control a vast majority of the world's oil supply. Oligopolies are also characterized by the difficulty of entry into the field and the interdependence of the firms operating in the industry (Mankiw 2003). Pure competition has none of these characteristics, and is identified by the lack of entry barriers, many options for consumers, and a lack of influence on the overall pricing by individual suppliers (ibid.).

In assessing which of these models of a market would be most beneficial to the interest of a business, the most obvious choice is a pure monopoly. Although this model does not necessarily provide the best option for operations in terms of many aspects regarding society as a whole, in terms of business sense, it is the most beneficial and profitable model for a firm to operate in. As a business owner, if the product or service provided by a firm does not face competition from any other firm, the costs of providing the product can be lowered, supply can be determined at the full discretion of the firm, and pricing can also be fully left up to the firm.