Thursday, May 9, 2019
The Absence of Competition and Price Discrimination in the Market Research Paper - 145
The Absence of Competition and Price Discrimination in the Market - Research Paper ExampleOne of the impairmentes to society as a offspring of monopoly versus perfect competition is limited output and last prices. Because of its market dominance, a firm in a monopolistic marketplace has the exclusive rights to raise prices. Consequently, when it does so, the society has no alternative but to buy high cost products. In contrast, in perfect competition, if one business raises prices the society can just yarn-dye to the next competitor for a lower price. Thus, society gets better prices (Samuelson & Marks, 326). The losses to society can bring forward be explained in terms of supply and cost curves. In perfect competition, prices and the number of goods produced are arrived at by looking at the market demand and supply curves. Accordingly, society is assured of competitive prices, which unavoidably lead to minimum prices. In a monopoly, the supply curve is hardly there. The amount of output does non determine the prices. Whether the sole firm produces less or more, it can still maximize the prices because the competitive take is restricted. Hence, in a monopoly, firms maximize their profits by raising prices without any added benefit to society (Samuelson & Marks, 327). In addition, in a monopoly, the sole firm produces less in order to increase the price, consequently exploiting society. Finally, the loss to society as a result of monopoly versus perfect competition is the reduction in the consumer surplus. Under monopoly, because of increase prices firms earn much more than what consumers gain from them. As a result, the reduction in consumer surplus leads to a reduction in consumer social welfare.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.