Talk:Monopoly/Archive 1

This is an archive of past discussions about Monopoly. Do not edit the contents of this page. If you wish to start a new discussion or revive an old one, please do so on the current talk page.

Archive 1

Illegal‽

Is monopoly or mopolizing illegal in the United Kingdom. Thanks -- Kilo-Lima 20:05, 9 October 2005 (UTC)

See contestable monopoly theory below. There are plenty of monopolies everywhere. The Beatles is a monopoly on their songs (which is perfectly legal). The illegal for them would be to try to prevent anyone else to sing, or start including, for example, a candy, with every Beatles CD they sell (which would be using music monopoly status to harm candy manufactures).

Question

What's the phenomena known as where a company can ensure greater tendency toward monopoly because as it's consumer base for it's product grows, so too does the value of the product? Examples: Microsoft Windows, especially during the 90's, and the telephone in the late nineteenth and early twentieth centuries (that WOULD roughly be the shape of the epoch right?) Thanks. MondoManDevout 11:59, 1 January 2006 (UTC)

Ok, it's network externalities. MondoManDevout 09:10, 22 January 2006 (UTC)

Contestable monopoly theory

This page is not complete without mentioning Contestable monopoly theory (aka Contestable monopoly defense). It goes basically like this:

Suppose, in some town there is only one pizza place. It is by definition a monopoly (the only provider of the service blah blah). But it is a Contestable monopoly (which means it does not create additional barriers to entry, and anyone else can rent a place, install an oven and sell pizzas too). And the fact that no one bothers to try means that the prices of the existing pizza place are not higher that they would be in the presence of the competition. Therefore, though a monopoly exists, no harm is done to anyone.

When analysing a monopoly, the key question is whether it is a Contestable monopoly (not preventing other firms from entering the market), or a harmful monopoly (which means, for example: lobbies for new barriers to entry, uses monopoly status in one area to become a monopoly in another etc).

There's the contestable market article. And, yes I agree that the concept needs to be explained here. RJII 00:38, 8 April 2006 (UTC)

I just changed the text in the natural monopoly section to reflect this fact. Instead of stating "a policy of laissez-faire must result in monopoly and efficiency losses for society," it now reads "a policy of laissez-faire must result in a single seller." Like you said, just because there is one seller doesn't necessarily mean that anybody is harmed.

Coercive monopoly merge?

This makes no sense:

"A coercive monopoly is one psychology that arises and whose existence is maintained as the result of filiation any sort of activity that violates the principle of a free market and is therefore insulated from competition which would otherwise be a potential threat to its superior status. The term is typically used by those who favor laissez-faire capitalism."

So I looked at the actual article and found that it's the same as this one, only with more detail.

Merge? Salvor Hardin 17:48, 4 May 2006 (UTC)

That's a common misunderstanding you're having. There is a crucial difference. A coercive monopoly is a specific type of monopoly. A monopoly is simply a situation where there are no competitors. A coercive monopoly is a situation where there are no competitors AND competition is impossible (because of legal restrictions or other coercive measures). Not all monopolies are coercive monopolies. For example, competition may be absent simply because other firms haven't found a way to cut their own costs down enough to offer a comparable price for their product. Competition is possible, but it's not profitable so no competition exists. Or, there can be a monopoly simply because no one has gotten around to trying to compete yet. A coercive monopoly has two conditions. 1) It's a monopoly (meaning their are no competitors) 2) Competition is forcibly prevented (either by the firm itself, such as through extortion, or by government restrictions). A monopoly that exists simply because they're outcompeting other firms by offering better products at lower prices would not be a coercive monopoly. So, no, it wouldn't make sense to merge. This essay by Alan Greenspan is explains it well: [1] RJII 02:27, 17 June 2006 (UTC)

monopolistic competition

This has already been addressed, but I took out this segment,

Monopolistic competition

Main article: Monopolistic competition

Industries which are dominated by a single firm may allow the firm to act as a near-monopoly or "de facto monopoly", a practice known in economics as monopolistic competition. Common historical examples arguably include corporations such as Microsoft and Standard Oil (Standard's market share of refining was 64% in competition with over 100 other refiners at the time of the trial that resulted in the government-forced breakup). Practices which these entities may be accused of include dumping products below cost to harm competitors, creating tying arrangements between their products and other practices regulated under antitrust law.

Monopolistic competion has an unfortunate name, as it actually includes many firms, and is closer to perfect competition than monopoly. It is not a type of monopoly, and indeed, without government intervention (not alluded to in the deleted excerpt), monopolies would not act as firms in monopolistic competition would. Akshayaj 19:01, 25 July 2006 (UTC)

Barriers to entry

I took out the claim that a monopoly has to have barriers to entry. That's not true. All that's required for monopoly is that it is the sole provider. Beyond the classroom 03:17, 21 December 2006 (UTC)

Disambiguation

There is an ongoing CFD discussion for this article's category Category:Monopoly (economics) (Wikipedia:Categories for discussion/Log/2007 February 11#Category:Monopoly (economics)]]. Within that debate, it has been suggested that this article and its category should share the same name. It has been further suggested that, in order to disambiguate from Monopoly (game), this page and its category should be named Monopoly (economics). Any views, whether on the category debate or on renaming this page?

Xdamr^talk 02:46, 13 February 2007 (UTC)

There are a number of similar cases, such as Risk, Life,Career and so on. In all these cases, the original real-world concept is the main article, and the derivative game is disambiguated. Monopoly as represented by the Post Office, Microsoft and so on is an important fact about the real world. The board game is of interest as a minor feature of popular culture.JQ 05:47, 13 February 2007 (UTC)

SALT MONOPOLY

Every monopoly must be considered to be potentially "bad " It may temporarily be "good" so long as there is an alternative - but then it wouldnt be a monopoly

By definition a monopoly allows exclusive sale or purchase of a product or service, however the control and exclusivity of a human need in the hands of another human is at its most dangerous when its basic availability is at stake - sooner or later the exclusivity is mishandled either intentionally or not. Slavery was clearly the ultimate result of monopoly.

Such was the monopoly of the supply of salt - a human need equivalent to the air we breath, the water we drink and the proteins we consume. SALT MADE THE WORLD GO ROUND David Bloch

"By definition a monopoly allows exclusive sale or purchase of a product or service, however the control and exclusivity of a human need in the hands of another human is at its most dangerous when its basic availability is at stake - sooner or later the exclusivity is mishandled either intentionally or not. Slavery was clearly the ultimate result of monopoly"

This passage was unsourced in the article, and does not have an encyclopedic tone. It also did not particularly fit in the article as it is written now. A well written, sourced, encyclopedic section on the human rights effects of certain monopolies may be appropriate (or perhaps should go in a specific article about the salt monopoly). This was none of those; accordingly, I have removed it. Gjc8 02:41, 13 December 2006 (UTC)

The Gabelle represents as much a catastrophic method of taxation as well as the use of private monopoly to ensure tax collection while getting the right to gouge the customer. It was above all else a highly-regressive tax that imposed unconscionable burdens upon people obliged to live at the brink of starvation. People were obliged to pay the tax even if they did not buy salt. What might have been a minor nuisance for a large landowner might have caused infant mortality. One can also add that the ancien régime served the ruling class very well and the common man very little.

It is difficult to establish what damage arose from the pathological taxation and what damage arose from the establish of an unneeded monopoly. Both do great harm to the people and create discontent that feeds a pre-revolutionary situation.--Paul from Michigan 03:40, 18 March 2007 (UTC)

Regarding AT&T example

Bold textItalic textThe example of AT&T sounds like an argument in favor of the break-up: service would not suffer, so we should break it up. I personally had a live radio debate with a rep from AT&T who argued that the break-up would hurt consumers.

Let's make the article NPOV. Describe what a monopoly is. After that, give arguments for and against granting monopolies.

Perhaps there are some circumstances in which monopolies are "good" -- such as municipal water utilities. Some disputed examples would be electric power generation/distribution or cable TV.

The article should shed some light on the Microsoft operating system monopoly (quasi-monopoly? near monopoly) in the PC market -- without getting into all the ins and outs of the court cases -- just the economic issues.

Contestable monopoly in the OS business, possibly harmful (POV) in the applications business.

Who can write this?

Some monopolies are necessary because the market is too small for competition. What may look like gouging to someone passing through often reflects the impossibility of more than one entity operating profitably. You can expect gasoline at a place that has a sign "Next Gas 82 Miles" to cost much more than in some suburb in which almost every major intersection has a gas station on every corner, and nobody can get away with charging more than a few cents a gallon more for the same grade of gasoline.

Electric power generation is not a monopoly; most electric suppliers to the consumer have the choice to buy electricity from multiple sources. Distribution is a monopoly because few people want multiple power lines leading to the same place.

--Paul from Michigan 07:33, 18 March 2007 (UTC)

Monopolies granted by the state

How about a monopoly which comes about, not by some clever fellow cornering the market, but by government grant? Like a municipality which allows only one utility company to generate electricity or provide cable TV service? --Uncle Ed 19:03, 4 December 2006 (UTC)

Natural monopolies exist. Paradoxically, generation of electrical power is not a natural monopoly; distribution is because of the great cost of establishing power lines. The government can regulate a utility so that, in theory, the monopolistic supplier of energy through the power grid does not appear to gouge.

Most governments have powerful incentives to restrain monopoly power in something so basic as electricity. Should the electric company gouge, such might discourage businesses (especially in manufacturing) from moving to the community. Add to this, overpriced electricity would make public expenditures unusually costly; schools and hospitals would become conduits of monopoly profits from taxpayers to the monopolist.

Cable television, once as a rule a private monopoly in most communities, was often so set up as a means of collecting new taxes upon revenues. "Franchise fees" helped budget some local budgets. Technologies often work to establish alternatives to a monopoly that charged too much and thus seemed too profitable. Think of satellite television as an alternative. To be sure, the supply of programming is itself a monopoly. The low-value programming (home shopping, religion) that costs little to produce and the supplier wants to be made available to everyone (and is little watched) comes for free, but movie studios and sports entrepreneurs ensure that certain high-value programming (recent-release movies, live sports) are available on 'premium' packages.--Paul from Michigan 04:13, 18 March 2007 (UTC)

An addendum: any monopoly granted by the State solely to enrich persons or interests (probably cronies) that the government deems deserving of monopoly power is likely to fleece customers and create a feedback of political corruption. Crony capitalism usually implies at best cartels and at worst monopolies. The claim that some special interest is particularly deserving of guaranteed high and abnormal profits is pure cant.--Paul from Michigan 07:39, 18 March 2007 (UTC)

Question

Why aren't modern day unions viewed as monopolies and broken up by anti-trust laws? Unionized labor is the sole producer of labor for a unionized organization. Unionized labor has caused many problems, such as outsourcing of manufacturing jobs, and uncompetatively priced american vehicles. Why aren't unions considered monopolies? 68.9.94.12 02:48, 22 March 2007 (UTC)

Please visit my website / userpage =P

Hi! I tried to edit the article Monopoly. The first version is at [2] Please visit it when you have time. Thank you. User:Kushal_one --Click me! 21:45, 23 May 2007 (UTC)

Historical Monopolies

In that section why is WWE not listed? It's the biggest most known wrestling company in the world, that has a habit of taking over smaller or potentially dangerous competitors like WCW and ECW. —Preceding unsigned comment added by Goblin Knight (talk • contribs) 04:33, 14 January 2008 (UTC)

Definition

I am not convinced the second sentence is accurate. Hence it needs to be sourced.

Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.

The lack of substitute goods is not required in the common definition, IMHO, although I haven't looked for sources. (And using Coca-cola as an example where viable substitute goods are available is wrong, as others have pointed out.) — Arthur Rubin | (talk) 21:41, 30 September 2006 (UTC)

I think the sentence is reasonably accurate - for an example of a similar definition, Britannica states in it's opening paragraph on "Monopoly":

..exclusive possession of a market by a supplier of a product or a service for which there is no substitute [3]

To convince you why it is necessary to exclude substitute goods, consider a market where a company has a monopoly, but where there is a competitive market in a perfect substitute. For example, a company might be the sole seller of red widgets, but be faced with lots of competitors producing green widgets. If widget consumers don't care whether the widgets are red or green, so that red or green widgets are perfect substitutes, then the producer of red widgets is selling in a competitive market and is a price taker. He can't raise his price like a monopolist, because everyone would switch to the competition, so it doesn't make sense to call the market situation a "monopoly". Enchanter 15:59, 1 October 2006 (UTC)

Isn't the decision as to whether a substitute is "acceptable" up to the consumer? (In other words, in theory, there's no such thing as a "perfect substitute" unless the products are identical and perceived to be identical.)

It still needs to be sourced, even if it is the standard definition. — Arthur Rubin | (talk) 17:33, 1 October 2006 (UTC)

Yes, the degree to which two goods are substitutes are a matter of consumer preferences and consumer decisions. So whether there is a monopoly or not depends in part on how consumers decide to behave. I'm not sure I follow your argument that "in theory, there's no such thing as a perfect substitute" - it's easy to construct a situation in theory where people are completely indifferent between two goods (such as the red and green widgets in my example above), which is what is meant by "perfect substitute". Enchanter 01:06, 2 October 2006 (UTC)

You can find some consumer who will care whether the widgets are green or red; therefore I stand by my assertion that "there is no such thing as a perfect substitute." But that's not relevent to the assertion that, for something to be a monopoly, there must not be an acceptable substitute. It still needs a cite in the article. After that, we could argue which is the most common definition in economics. — Arthur Rubin | (talk) 14:26, 2 October 2006 (UTC)

You're assertion that "in theory, there is no such thing as a perfect substitute" is without any grounding. As I said, it's easy to construct such a situation in theory, you just say "assume that consumers are completely indifferent between two goods".

Maybe what you meant to say is that "in practice there is no such thing as a perfect substitute". Whether that is the case or not is a question to be answered by empirical observation of actual consumer behaviour in the market in question, and might or might not be true depending on what you observe.

You will find plenty of definitions of monopoly elsewhere that say something like "a single seller in the market" without mentioning substitutes. I don't think there is any real issue at stake here about the definition monopoly is in economics; mentioning substitutes is just a more precise version of the definition. A full, detailed article on monopoly will mention at least somewhere the importance of the lack of close substitutes (as the Wikipedia article already does).

By contrast, there are genuinely different definitions of monopoly used in, for example, laws and competition regulations in various countries, which could probably do with a mention in the article.

I fully agree that it's worth citing in the article and would suggest the Britannica reference as being as good as any. Enchanter 22:24, 2 October 2006 (UTC)

Britannica is a tertiary reference. We should have a secondary reference (an economics textbook, or an article by Greenspan, Keynes, or some other recognized economist). (And "more precise" should not include "less accurate". See accuracy and precision for the relevant concepts.)

I added a citation to support the statement. You can look for the book in books.google.com --_N_e_g_r_u_l_i_o 17:12, 12 October 2006 (UTC)

I dealt with the issue of the POV-pushing definitions. There is a common definition used by the left-wing (Socialists) in order to claim lots of large businesses are monopolies. This is a non-economic claim. However, many Libertarians and other Capitalists try to use the main economic definition of "monopoly," to assert that no monopoly has ever existed, and that all competition has been fair. In both cases, it is an attempt to skew economic theory to establish a certain POV. ☯ Zenwhat (talk) 21:53, 15 January 2008 (UTC)

Vandalism

What about protecting this page against vandalism?--Kozuch (talk) 07:52, 11 February 2008 (UTC)

Graph of Surpluses and deadweight loss created by monopoly price setting

This graph is actually incorrect, the MC-curve should cut the Q-axis exactly in the middle between the origin and the point where the demand curve cuts the Q-axis.

This is due to the fact that D is linear:

deriving the turnover (p.Q) to Q results in the MC curve:

D = a + b.Q

Q.D(Q) = a.Q+ b.Q²

MC = a + 2b.Q

I think you mean the MR-curve, but yeah, you're right. The graph works well in the abstract, but it should probably get rescaled. Cretog8 (talk) 10:54, 12 June 2008 (UTC)

OK, I think I got it. CRETOG8(t/c) 06:01, 20 August 2008 (UTC)

political discourse

I cut the political discourse definition. It's too fuzzy. For the example given where a definition used the term "exclusive" control, that really mens the same thing. CRETOG8(t/c) 06:39, 20 August 2008 (UTC)

Harold Hotteling example

I'm not sure the Hotteling example applies in the monopoly article. Could anyone confirm? —Preceding unsigned comment added by Luiguimoterani (talk • contribs) 14:21, 22 October 2007 (UTC)

the hotelling example used doesn't adequately prove that the second ice cream seller will place his stand next to the first ice cream seller. it is a premise that proves the conclusion. —Preceding unsigned comment added by 192.93.8.247 (talk) 12:42, 8 December 2008 (UTC)

Dumping a benefit of monopoly?

The article mentions that dumping might be a benefit of a monopoly - but by lowering costs below marginal costs, dumping is in fact Parreto inefficient, since it will cause waste and miss-allocation of resources, so it would not usually be regarded as a benefit overall (even if some people might gain in the short term). —Preceding unsigned comment added by Pogsquog (talk • contribs) 21:06, 22 May 2008 (UTC)

There aren't any benefits of monopoly due to the lack of the sole force responsible for doing anything efficiently, competition —Preceding unsigned comment added by 71.204.61.136 (talk) 00:15, 23 January 2009 (UTC)

Merge from monopoly law

User:LSD merged the article monopoly law most recent version here into this article. I'm not necessarily opposed to the merge, but I would like to at least have some discussion on whether or not it was done right. --Eastlaw ^talk ⁄ _contribs 07:10, 1 February 2009 (UTC)

Everything that was in that article was already present on other pages. Nothing was lost due to the merger/redirection. It was proposed that the article be split/merged six months ago, but nothing's been done. This was the simplest and least destructive means of solving the problem. LSD (talk) 21:30, 1 February 2009 (UTC)

Examples of alleged and legal monopolies

It seems this section has too few citations. I don't want to mark the page myself, but would like to hear from the more experienced editors out there. When one reads that section, shouldn't there be some encyclopedic reference supporting the claim which puts each of those examples in this section? JT Pickering (talk) 08:31, 8 February 2009 (UTC)

SAQ

"SAQ has a monopoly as it is the only chain of stores where alcohol can be sold in Quebec". Who wrote that? That means beer and dep wine is not alcohol? That also imply that there are no private importators in Quebec ??? I think that line should be removed. —Preceding unsigned comment added by 209.104.75.198 (talk) 15:54, 20 February 2009 (UTC)

revolution in monopoly theory? really?

The idea that monopolies in markets with easy entry need not be regulated against is known as the "revolution in monopoly theory".

I doubt that the label revolution in monopoly theory has been adopted by the academic community, in general. The source doesn't look reliable enough, also. --Forich (talk) 05:42, 2 March 2009 (UTC)

List of monopolies

The list of monopolies had gotten way to long to fit in naturally to this article. If someone liked it and wants it to stay, I would recomend starting a seperate page just for the list. PDBailey (talk) 00:53, 11 March 2009 (UTC)

Economic analysis section

I plan to change this text (first paragrah in the section):

A monopoly is not merely the state of having control over a product; it also means that there is no real alternative to the monopolised product. Because a single firm controls the total supply in a pure monopoly, it is able to exert a significant degree of control over the price by changing the quantity supplied.

For something like this:

"In economics, the study of market structures under imperfect competition begins with the anaylisis of Monopoly. If there is a single seller in a certain industry and there are no close substitutes for the good being produced by her, then the structure of that market is called Pure monopoly. Sometimes, there are few sellers in an industry and/or there exist close substitutes for the good being produced. In this case, each seller can be continued to be called a Monopoly since it can alter the market price via quantities produced, however, it is no longer a pure monopoly but just a firm exercising monopoly power. In contrast, the concept of Oligopoly is considered to arise only in market structures where a) there are two or more sellers and b) sellers take into account their strategic interaction with each other. --Forich (talk) 05:25, 16 March 2009 (UTC)

Official definition of the term is required and referenced....

either from legistation or from standards--222.64.21.59 (talk) 00:35, 30 August 2009 (UTC)

Government monopolies

Governments act as a de-facto monopoly on things such as police/military, education, money, roads, etc. Should a section about this be included?Cameron Nedland (talk) 00:46, 28 November 2009 (UTC)

Natural Monopoly Needs Examples

The "natural monopoly" section currently does not give any examples. I think having a number of examples, both current and historic, as well as some discussion of which specific industries this phenomenon tends to happen in, would greatly enrich this section. As it is, it reads as overly speculative...possibly just economic babble that doesn't actually refer to anything real. Concrete examples are needed! Cazort (talk) 23:30, 6 December 2009 (UTC)

There is a collection of examples further down. However, the natural monopoly section is indeed terrible.1Z (talk) 14:14, 7 December 2009 (UTC)

Justification for bold edits & call for improvements

I made a series of bold edits, including adding a refimprove tag to the article; although I justified my edits in the edit history, I wanted to explain my rationale a bit more here. I think there are serious problems with this page and many more edits are needed. Some thoughts:

There are very few in-line citations for the economics section, and it seems very monolithic (i.e. presenting a single POV). The basic accepted stuff should be really easy to get from any standard economics textbook (as a starting point), and then maybe dive deeper later. But I think it's important to present different perspectives to whatever degree they exist--and I know monopoly is more controversial to economists than this page makes it seem.
I removed a box of mathematical language that had absolutely no context (and no sourcing) and didn't seem to add anything to the page. I'd rather keep this stuff off the main page and then create a separate page for specific mathematical theories--and such material absolutely must to be directly sourced if it's going to be added back.
The article was loaded with WP:Weasel words, from "wide agreement" or "there is some debate about" (with no mention of who is debating and no source) or "the standard model" without citation. Any discussion of debate or agreement absolutely needs sourcing and clear identification of who is advocating which viewpoint.
The law section is well-sourced but it mainly discusses EU law and doesn't represent a balanced global perspective discussing, comparing, and contrasting different approaches.
There are many interesting and well-sourceable topics are not even touched on this page...i.e. on a local level, the relationship between zoning and monopoly, or on a national level, a country's banking system, central reserve bank, or national currency as a monopoly...or the notion of government entities competing against private corporations (i.e. to what degree is the USPS a monopoly?), or the relationship between intellectual property and monopoly.

Ideas? Cazort (talk) 20:35, 26 August 2009 (UTC)

I saw your edits and was all ready to react to them, as your edit summaries did sounds quite bold. However, the edits themselves were very sensible. So, I think you're off to a good start improving this article. Of your list above, the only thing I might contend with is the final point. Even that isn't because the point is wrong, just that some editors might take the point wrong and get into WP:UNDUE and/or WP:OR trying to fill in lots of ideas surrounding monopoly. CRETOG8(t/c) 20:46, 26 August 2009 (UTC)

Yes, I agree that with the last point it's important to stay on-topic and avoid original research. Cazort (talk) 02:24, 28 August 2009 (UTC)

I just saw Cazort edits, and they are indeed major changes, but ultimately the article looks better now. I am willing to help improve the neoclassical ideas on monopoly. On that matter, the mathematical box that he removed looks like can be rescued if placed in a pricing theory and monopoly section. I'll give it a try soon.--Forich (talk) 21:06, 31 December 2009 (UTC)

Historical examples

The Coalminers of New South Wales example should either be removed or relocated to Cartels, Oligopoly, Antitrust Laws, etc. It is not an example of a monopoly. Crow King (talk) 01:56, 7 February 2010 (UTC)

Merge proposal

Just a few things that could be used in this article about the way monopolies can be broken down and economic profits vanish. - Jarry1250 ^{[Who? Discuss.]} 21:13, 24 November 2010 (UTC)

Monopolistic Competition is More Like Perfect Competition than Monopoly

You seem to confuse "Monopolistic Competition" with "Oligopoly". In particular, your verbage "near monopoly" is indicative of a "Price Leader" in an "Oligopoly"; where 1 firm actually dominates the Market and other firms are essentially inconsequential in the Market (even though the xominent firm does.consider.them when planning production/pricing). Microsoft might be considered an example of "Price Leadership", however there are many better examples out there. I believe Microsoft 'can be' classified as more than just a "Price Leader" because of its consistent and absolute dominence of their market (but to some extent it is mostly my contention and someone else could technically disagree). In either case, this verbage and the use of Microsoft as an example of what you mean clearly indicates you are confusing the terminology "Monopolistic Competition" with the terminology "Oligopoly". Your statements fits the term "Oligopoly" far better than they fit the terminology "Monopolistic Competition"! Actually "Monopolistic Competition" is very much like "Perfect Competition", with 2 notable exceptions: 1) "Perfect Competition usually involves homogeneous products, while "Monopolistic Competition" is usually associated with heterogeneous products that are none the less similar by nature (according to their use by consumers). 2) whereas firms set their Marginal Cost of the product exactly equal to the price they get for their product in "Perfect Competition" (horizontal Price-Demand curve), "Monopolistic Competition" has a Price that is higher than the Marginal Cost (downward sloping Price-Demand curve). However, it should be noted that both "Monopolistic Competition" and "Perfect Competition" are typified by firms with 0 Economic profit. This is completely different from either a "Monopoly" or an "Oligopoly"; both of which are typified by an existence of a positive "Economic Profit". In both "Monopolistic Competition" and "Perfect Competition", new Competing firms continue to enter the Market until any pre-existing "Economic Profit" disappears from the industry. Both "Monopoly" and "Oligopoly" usually exists in a market that is essentially closed off from the possibility that additional competition competition can enter into their Market.
™ This section needs to be redone.MGMontini (talk) 16:06, 12 January 2011 (UTC)

Monopolistic competition

The definition of monopolistic competition that appears in Wikipedia is incorrect. The article claims that:

"Industries which are dominated by a single firm may allow the firm to act as a near-monopoly or "de facto monopoly", a practice known in economics as monopolistic competition."

In fact, monopolistic competition is something else altogether. It was developed almost simultaneously by American economist Edward Chamberlin (1899-1967) and English economist Joan Robinson (1903-1983). It is a hybrid of competition and monopoly which describes well the chaacteristics of some markets such as detergents, shampoo, cereals and other markets with differentiated products. One possible definition is:

"A type of competition within an industry where:

1. All firms produce similar yet not perfectly substitutable products.

2. All firms are able to enter the industry if the profits are attractive.

3. All firms are profit maximizers.

4. All firms have some market power, which means none are price takers." (www.answers.com)

The point about monopolistic competition is that there are many (potentially infinite)differentiated submarkets in which a particular firm is a monopoly (thus it sets price and quantity), but because of free entry and competition across submarkets, none of the firms make profits. It is a blend of competition and monopoly.

This is quite different from the definition given by Wikipedia and shoupld be corrected ASP.

See my posting in 2 above. I agree completely. MGMontini (talk) 16:47, 12 January 2011 (UTC)

Came here to post about the exact same thing. The description of 'monopolistic competition' in this wikipedia artcle is just wrong.

in defence of monopoly

Could one not argue that in order to represent a neutral and comprehensive perspective, it is necessary to include a section in defence of monopolies? for example, economies of scale, the Williamson trade-off, the transitory nature of monopolies, the scale of domestic monopolies in comparison to international monopolies, the danger of cartels and the fact that a greater investment into innovation may be possible... —Preceding unsigned comment added by 81.108.144.200 (talk) 17:54, 9 May 2011 (UTC)

I would also argue that monopolies provide increased connectivity to supply chains, increasing performance^[1], while reducing their complexity and thus increasing their efficiency^[2]. There is another efficiency factor, related to firm size^[3], which would follow similar trends found in cities, universities, biological systems, etc., where increasing size correlates with increasing efficiency. The idea that monopolies have no incentive to reduce cost or innovate is silly, and doesn't reconcile with Bell Labs, for example, which produced highly technical innovations that we still use today, but was not profitable. This article is definitely POV, though I am not going to unilaterally mark it as such. Does anyone else agree? 64.134.241.231 (talk) 18:32, 13 December 2012 (UTC)

Price greater than Marginal Cost

Mathematically, MR=MC can imply dP/dQ=0 at the point where Q satisfies the equation. (P being Price and Q being Qty produced, where P=f(Q)). So should it not read "Price can be greater than or equal to marginal cost"? Note this does not imply a loss, it simply implies that the last unit produced does not yield any profit. Just to understand if the statement is a generalization of is it mandatory? -Alok 11:29, 9 January 2013 (UTC) — Preceding unsigned comment added by Alokdube (talk • contribs)

de facto

It says in the article: "A monopoly can also arise from "fair" competition, when a single provider of a good or a service is chosen extensively or exclusively by the marketplace. Such monopolies are termed de facto monopolies." This conflicts with the comments earlier in the article equating a de facto monopoly with a natural monopoly. What is the truth? (RJII) DEC 29

My impression is that a "natural monopoly" is a kind of "de facto monopoly." That is, not all de facto monopolies are natural monopolies (given the definition of natural monopoly in the article). (RJII) DEC 29

This idea probably arises from an intuitive opposition of "de jure" and "de facto"; but the meaning does not permit this. "De jure" is just a synonym for legal (i.e. government) monopoly. But a "de facto" monopoly simply means a near-monopoly or "effective" monopoly - try Googling the term. It isn't actually a classification in the same way as "legal" and "natural"; it's more a qualifier. If you want to put a name to it, maybe monopolistic competition. Rd232 17:23, 30 Dec 2004 (UTC)

Oh, I see where you're coming from - you want to use "de facto" as the name you were searching for in the Talk:Natural monopoly discussion. Sorry, it won't work. Look up de facto. Rd232 17:28, 30 Dec 2004 (UTC)

You're correct that these concepts are not at all the same, and I've edited the article to separate them. I had a lot of trouble concentrating due to off-line distractions, so someone should probably copyedit what I wrote to be more readable. Gazpacho 06:24, 30 Dec 2004 (UTC)

Look like Rd232 disagrees with you and removed your changes and my editing. (RJII) DEC 30

I know this is old, but the changes were correct and Rd232's appeal to look up de facto falls flat; when you get there, click the wiktionary entry and you find it actually means REGARDLESS of legal status. The wikipedia article Rd232 gets confused on is covering the legal usage. As an English word, the dictionary is the authority, not the encyclopedia. 2001:470:1F04:3DF:0:0:0:2 (talk) 12:24, 2 June 2013 (UTC)

Apple's AppStore added to the list of examples of monopoly?

This my suggestion for the article. I would like to add Apple's AppStore for iphones as an example of monopoly. Sources: http://www.thedailybeast.com/newsweek/blogs/techtonic-shifts/2010/05/03/monopoly-comes-to-the-app-store-and-we-re-not-talking-about-a-board-game.html http://www.washingtonpost.com/blogs/blogpost/post/apples-tough-day-opening-of-amazon-appstore-accusations-of-bigotry-and-a-monopoly-charge/2011/03/22/ABu1kvDB_blog.html

Anyone for or against this? Averagejoedev (talk) 10:09, 8 August 2011 (UTC)

I'm not an economist, but I'd say it isn't really a monopoly. For one thing, while it is the sole distribution point, many vendors use it and there are many examples of competing products, so if you don't like the price and/or features of one app you can possibly find a similar app which is more to your liking. Vendors do have to play by Apple's rules, but as far as I know, are free to set their own price. And finally, there are competing platforms in the smartphone and tablet markets: if you don't like Apple's products, prices, or corporate practices you can always go Android. Wschart (talk) 19:38, 31 May 2012 (UTC)

I think Averagejoedev meant to say that AppStore is a monopolist in that it dominates the 'app vending platform' market. Kayau (talk · contribs) 14:03, 9 January 2013 (UTC)

AppStore doesn't dominate the 'app vending platform' market, and it never did. It just is the sole provider of... its own brand. Which is not a monopoly, any more than Ford is a monopoly because only they make 'Ford' cars. 2001:470:1F04:3DF:0:0:0:2 (talk) 12:32, 2 June 2013 (UTC)

The {{fact}} tags in this article

Are those [citation needed]s really necessary? Although, as an encyclopaedia, we should cite everything except 'the sky is blue' (WP:BLUE), a lot of the fact-tagged sentences in this article are basic economic concepts that can hardly be challenged. Although there should be citations after them, I don't think they need to be tagged. Kayau (talk · contribs) 04:36, 5 January 2013 (UTC)

They can certainly be challenged if they're not cited. And this article is of... very low quality compared to most on wikipedia of similar length. 2001:470:1F04:3DF:0:0:0:2 (talk) 12:34, 2 June 2013 (UTC)

Merge Proposal from Monopolization

The article Monopolization appears to have only legal information regarding monopolisation in the United States and should be merged with this article. Lenny (talk) 09:30, 13 April 2013 (UTC)

Why should US-specific information be on this page (or any page) in the first place? I'm sick of seeing things like "Competition law does not make merely having a monopoly illegal, but..." - they don't indicate what countries law they're referring to - and I know for a fact the entire world doesn't follow American law.

I propose an immediate heading change: "Law (United States)". — Preceding unsigned comment added by 203.118.162.247 (talk) 20:03, 23 July 2013 (UTC)

Need some balancing here....

"No other part of economic theory has been so much misunderstood as the theory of monopoly." - Ludwig Von Mises, Socialism, 1922

I don't have a PhD in economics from the Univ of Chicago or anything, but this article has a significant slant. I think the economic theory of monopoly has to be presented here the way it is in the real world - as differing points of view. If I were a layman reading this article I would walk away thinking this was the definitive point of view. It most definately is not. Perhaps a "Free Market" or "Austrian Monopoly" section should be added to balance things. Points to address would be:

Pure monopoly and its exclusion from price theory.
Limited monopoly, catallactic competition and monopoly price
Monopoly gain vs entrepenuerial profit
Government and monopoly

Anyone else agree? I'll take a crack at it. Crow King (talk) 01:39, 7 February 2010 (UTC)

MrSativa (talk) 18:38, 19 October 2013 (UTC):There is too much Austrian ideology on this page. The problem is that the Austrian 'School' of Economics rarely can show historical examples of when their theory works - not satisfied with that, they then start to muddy actual historical examples of their theories failing. They are well financed because their boom and bust economics are extremely profitable for those who are already very wealthy, not because they are the best scientific theory around. This is part of the wave of corporate corruption that their current hegemony has wrought. This whole monopoly page is riddled with their interference and meddling.

Definition?

How do economists and the U.S. government define "monopoly"?

Economists

Robert W. McChesney claims "that economists use the term" to refer to organizations that "control sufficient market share -- usually at least 50 or 60 percent -- to determine both pricing and how much competition they have. As such they pose a direct threat not only to smaller enterprises but to democratic governance." He claims that conservative economist "Milton Friedman argued that capitalism was superior for political freedom and democracy because it separated political power from economic power". For this, he cited Friedman, Capitalism and Freedom, (U. of Chicago Pr., 1962). See McChesney, Blowing the Roof off the Twenty-First Century: Media, Politics, and the Struggle for Post-Capitalist Democracy (Monthly Review Pr., 2014, p. 229).

McChesney continued, "One of Friedman's mentors at the University of Chicago, the laissez-fair champion Henry C. Simons, said it was imperative that private firms not be allowed to become too large and monopolistic for this argument to hold. ... [I]t was imperative -- for both genuine free enterprise and democracy -- that monopolistic firms be broken into smaller competitive units, or, if that was impossible, as with utilities and railroads, that they be "socialized" and directed by the government in a transparent way. He dismissed the idea of effective government regulation of private monopolies to produce the results that competitive markets would bring, because the monopolies would dominate the regulatory process." For this, he cited Henry C. Simons, Economic Policy for a Free Society (U. of Chicago Pr., 1948).

U.S. Government

The U.S. Department of Justice reports that, "The Supreme Court has defined market power as "the ability to raise prices above those that would be charged in a competitive market,"(8) and monopoly power as "the power to control prices or exclude competition."(9) The Supreme Court has held that "[m]onopoly power under § 2 requires, of course, something greater than market power under § 1."(10) Precisely where market power becomes so great as to constitute what the law deems to be monopoly power is largely a matter of degree rather than one of kind. Clearly, however, monopoly power requires, at a minimum, a substantial degree of market power.(11) Moreover, before subjecting a firm to possible challenge under antitrust law for monopolization or attempted monopolization, the power in question is generally required to be much more than merely fleeting; that is, it must also be durable.(12)" ({http://www.justice.gov/atr/competition-and-monopoly-single-firm-conduct-under-section-2-sherman-act-chapter-2}, accessed 2015-12-07.)

I would think that these perspectives should be discussed in this article. However, I'm not an economist, so I decided to try to raise the question here in the hopes that someone more qualified than I would revise the article to respond to the "Need [for] some balancing here...". DavidMCEddy (talk) 19:17, 7 December 2015 (UTC)

Monopoly Stats, Redux

This conversation was previously brought up, and it was decided at the time that we should not put Monopoly board stats (statistical likelihood of landing on each space, etc.) in the article because no reliable sources could be found. Well, I've thought about it a bit more, and now wonder: is a source actually needed for this information? We don't need sources for truisms, after all, and provided that the statistics were calculated accurately - which is likely because 3 different sources have gotten exactly the same results independently of one another - I think this would qualify. So, the questions are: (1) Do other editors agree with this line of thinking, and (2) if so, would this info be a useful addition to the page? Jtrevor99 (talk) 17:42, 27 April 2016 (UTC)

Dr. Calzolari's comment on this article

Dr. Calzolari has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

This long article is often imprecise, incomplete, with many repetitions, discussed topics are often not very important and some are missing,
and material is not well organized. In general it seems written by a first year undergrad student of economics. It should be rewritten ex-novo.
- "The verb monopolise or monopolize refers to the process by which a company gains the ability to raise prices or exclude competitors." raising prices is not generally considered an instance of monopolization.
- "Monopolies are characterised by decreasing costs" decreasing with respect to output. Better clarify.
- "The cost functions are the same." It does not make sense to compare costs in perfect competition and monopoly. there are million of reasons for cost to differ. What is identical is the idea of maximizing profits which however leads to very different outcomes in the two cases.
- the section "Monopolies versus competitive markets" in fat compare with perfectly competitive markets which are a special and extreme market type.
- "A PC company maximizes profits by producing such that price equals marginal costs. A monopoly maximises profits by producing where marginal revenue equals marginal costs.[20] The rules are not equivalent." this is not correct: the rules are in fact generated by same principle, maximizing profit which in both cases means equating marginal cost to marginal benefits or revenue. The difference arises from the fact that marginal revenue in perfect competition is equal to the price precisely because demand elasticity is infinite.
-"Second the slope of the marginal revenue curve is twice that of the inverse demand curve. ". This is only true in the specific example of the linear demand! not true in general.
-"Total revenue equals price times quantity." This definition occurs in the text well below the first use of the notion of revenue in the text.
- "Thus the total revenue curve for a competitive company is a ray with a slope equal to the market price". The reference to "ray" is useless and unclear.
- "A pure monopoly has the same economic rationality of perfectly competitive companies, i.e. to optimise a profit function given some constraints. By the assumptions of increasing marginal costs, exogenous inputs' prices, and control concentrated on a single agent or entrepreneur, the optimal decision is to equate the marginal cost and marginal revenue of production. Nonetheless, a pure monopoly can – unlike a competitive company – alter the market price for its own convenience: a decrease of production results in a higher price. In the economics' jargon, it is said that pure monopolies have "a downward-sloping demand". An important consequence of such behaviour is worth noticing: typically a monopoly selects a higher price and lesser quantity of output than a price-taking company; again, less is available at a higher price.[31]" This part is fundamental to understand the difference between monopoly and perfect competition and should be moved up in the relevant section.
- "A monopolist can extract only one premium,[clarification needed] and getting into complementary markets does not pay. That is, the total profits a monopolist could earn if it sought to leverage its monopoly in one market by monopolizing a complementary market are equal to the extra profits it could earn anyway by charging more for the monopoly product itself. However, the one monopoly profit theorem is not true if customers in the monopoly good are stranded or poorly informed, or if the tied good has high fixed costs." This paragraph is incomplete. It refers to important antitrust cases, like Microsoft and should be expanded clarified and with references added.
- The sub-suc section "Market power" is in the secction "The inverse elasticity rule" for no reason. In fact it should be moved up.
- "Price discrimination allows a monopolist to increase its profit by charging higher prices for identical goods to those who are willing or able to pay more." Price discrimination is only presente for monopolist in economics textbooks for simplicity of exposition. By no means it is a prerogative of monopolists! As son as there is market power in a market, firms can practice price discrimination. This long section on price discrimination could but cut out just referring to the wiki article on the topic.
- "It is very important to realize that partial price discrimination can cause some customers who are inappropriately pooled with high price customers to be excluded from the market. For example, a poor student in the U.S. might be excluded from purchasing an economics textbook at the U.S. price, which the student may have been able to purchase at the Ethiopian price'. Similarly, a wealthy student in Ethiopia may be able to or willing to buy at the U.S. " This sentence is unclear, not precise and useless.
- "A company maximizes profit by selling where marginal revenue equals marginal cost. A company that does not engage in price discrimination will charge the profit maximizing price, P*, to all its customers." This sentence is a repetition and is misplaced.
- market power is discussed and defined again in the section on price discrimination. This is useless.
- The section "Monopoly and efficiency" should be moved above after the section comparing monopoly and perfect competition.
-

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Calzolari has expertise on the topic of this article, since he has published relevant scholarly research:

Reference : Giacomo Calzolari & Alessandro Pavan, 2003. "Monopoly with Resale," Working Papers 2003.20, Fondazione Eni Enrico Mattei.

ExpertIdeasBot (talk) 15:38, 24 August 2016 (UTC)

Not vertical monopoly

Since this article does not contain the term "vertical monopoly", it should not be the redirect for that term. Skepticalgiraffe (talk) 20:03, 21 June 2017 (UTC)

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Countering Monopolies section biased

It would seem that the section is devoid of any mention of dissolving or countering monopolies through strong government intervention. Perhaps more should be said about alternative forms of countering monopolies, not necessarily extreme versions (e.g. Marxism), but something along the lines of Nobel laureate economist Elinor Ostrom's ideas about decentralization (even as it relates to governments being monopolies). — Preceding unsigned comment added by 84.214.210.145 (talk) 12:31, 28 June 2017 (UTC)

Agreed, it tries far too hard to convince. Prinsgezinde (talk) 20:23, 29 June 2018 (UTC)

The section is bizarre - it presents a (fairy far) right-wing argument, and then "counters" it with another right-wing argument. BeŻet (talk) 12:31, 30 October 2021 (UTC)