MONOPOLY
First, let's explain what a monopoly is. A monopoly is a firm that sells a product where they are the only ones that sell that particular product or where there is no direct competition.
I've been watching a series on t.v. called "The Men Who Built America" that is on the History Channel. In this series we follow the stories of Andrew Carnegie, John D. Rockefeller, Cornelius Vanderbilt, J.P. Morgan and a few other men who were instrumental in the building of America in the 1800 and 1900's and embodied the capitalist mindset that the world thinks of when they think of the United States. Each of these men have their specialties whether it's in the oil business, the railroad system, steel, shipping or finance, they each dominated their field and became the ultimate monopolists. As monopolists they were the price setters not price takers.
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| Andrew Carnegie Scottish-American Industrialist known for his expansion of the steel industry. |
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| John D. Rockefeller, Oil Tycoon. |
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| Cornelius Vanderbilt Amassed his fortune in the shipping and railroad industry. |
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| J.P. Morgan American banker and financier who dominated the world of finance. |
In today's age we see companies such as Microsoft and Apple as being monopolies of sorts. Microsoft dominates the field on their software and Apple software only works with Apple computers, cell phones, and mp3 players.
Sometimes the government will step in to prevent firms from becoming full on monopolies but sometimes the government gives a company exclusivity to produce a good or service. An example would be the drug companies. The textbook talked about drug companies being allowed to be monopolies because they encourage research. I understand where the government might think this and I realize there needs to be regulations within this industry but I can also see where there might be some manipulation on the part of the drug companies of the government when it comes to lobbying elected officials. It's a tricky business.
I had never heard of a "natural monopoly" before. This is where a single firm is able to provide a good or service for less cost than two or more firms can. The company that immediately comes to mind is Walmart because it provides goods and services at very low cost but it does have competition with Target. "In some cases, the size of the market is one determinant of whether an industry is a natural monopoly." (Mankiw, 303).
Trash removal is sometimes a government monopoly. I think this is because municipalities are often the one's putting trash service out to bid on behalf of it's residents. They do this to get the services for their residents at the lowest cost possible. My trash is removed by a single hauler, Waste Management, and this was chosen by the Town of Silt. Waste Management has great services, like single stream recycling that allows me to put all of my recyclables into one huge bin without having to sort it all out or go to another facility to take certain things.
“About the Series.” 2013. The History Channel website. Mar 28 2013, 3:06 http://www.history.com/shows/men-who-built-america/articles/about-men-who-built-america.
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