Monopolies versus competition: economic structures and market effects

Competition vs. Monopolies

In the American Economy, business is controlled by the government and the consumer. When a person is the owner of a business that is alone in its product that it provides for the consumer, it is said to be a monopoly. As a monopoly you have sole control over price. Monopolies are regulated by the government in order to prevent the misuse of power that a monopoly has.

If a person can only get turkey, for example from one store. Then the store can charge a lot more for that turkey than it could if the store next door was selling it too because then there would be competition. Also, the store would not have to produce a better quality of turkey because there would be no reason for it to do so. In this situation the consumer is taken unfair advantage of by the business owner, in this case the store.

Government regulates monopolies to promote a perfect competition economy and to get rid of the "turkey situation" discussed above. The benefits of a perfect competition economy benefit consumers. For example, if we go back to the store, in a perfect competition economy all of the stores have turkey. Now the stores want to make sure that the turkey that they sell is the best turkey and cost the least. In this situation they are competing for the consumer's business.