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One immediate ramification could be that the government intervenes in the market to limit Microsoft's monopolistic power. This has occurred frequently and Microsoft is constantly engaged in court proceedings to verify that it is not abusing its market position.
Another limiting factor would be that if Microsoft charged too much for its products then this would open the door for another company to enter the market or gain market share. For example, if Microsoft's OS's became too expensive then this would open a greater door for smaller competitors such as Linux. For most consumers, Microsoft's price does not exceed their switching costs for moving to a different platform. However, if Microsoft increases its prices substantially then this situation could be different.
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These companies can often charge a significant price premium for their goods and services. However, if a monopoly pushes the premium too far, then they are subject to some form of intervention and a changing market landscape. There may be examples that would violate this trend. For example, a pharmaceutical manufacture could have a strong monopolistic position with a lifesaving drug for a period of time. However, even then setting prices too high would led to other firms trying to break down the barriers of entry. Therefore although monopolies have a significant amount of control over their prices they must still keep their prices somewhat balanced with other external factors.
The OFT may then refer the companies to the Competition Commission (formerly known as Monopolies and Mergers Commission). The Competition Commission also plays a major role to investigate the situations which are called 'Oligopoly Situations' which involve explicit or implicit collusion between firms. Then the Competition Commission decides if the monopoly is acting against the public interest or not. And if they find a firm with a monopoly situation they
Monopoly Radical Treatise on Monopoly When a firm is the only seller or supplier of a good or a service for which there is no close substitute, it is referred to as a monopoly. Broadly speaking, every firm would naturally like to have a monopoly given that monopolies do not face competition. However, monopolists can only succeed in a market situation where the barriers to entry are very high (Brue & McConnell,
Both of these moves broke the monopoly. The Canadian government broke Bayer's monopoly and the second company moved into the market, creating a temporary oligopoly. The influx of Cipro from Mexico represented a substitute product, thereby breaking Cipro's American monopoly. This lowered the price of the drug until demand subsided -- note that it was demand that subsided and not supply. This despite the fact that the monopoly-granting patent protection
Monopoly Market Characteristics of Perfectly Competitive Industry A perfectly competitive market is characterized as the market in which the firms as well as the consumers are the price takers. A price taking producer implies to the producer whose actions and decisions are not affected by the market forces but are only affected by the choice of the consumers. Similarly a price taking consumer refers to the consumers whose preferences are not homogenous
To this end the argument that monopolies are bad to consumers carries a lot of truth and fact with it and will only be fair to look at such an argument with due considerations. References Baker, M.J. (1985). Marketing strategy and management. Macmillan: New York. Belk, R.W. (1975). "Structural variables and consumer behavior." Journal of Consumer Research 2: 157-164. Besanko, D. et al. (1996). Economics of strategy. John Wiley and Sons: New York. Day, G.
The deal was immediately criticized as anti-competitive by William Kennard, the chairman of the Federal Communications Commission, and by the Communications Workers of America, which represents some workers at both of the merged companies. But neither government regulators nor union bureaucrats will have the slightest impact on the latest merger. They have neither the power nor the desire to oppose the plans of the giant telecommunications monopolies. More substantial opposition