Monopolies!!! Are they good for society?

1
Monopolies!!! Are they good for society?
2
Monopoly Characteristics

• 1. Number of Firms 1
• 2. Variety of Goods None
• 3. Barriers to Entry Complete
• 4. Control over prices Complete

3
A monopoly will only charge a price when MC
MR!!!!
4
Economies of Scale

• The increase in efficiency of production as the
  number of goods being produced increases. Typicall
  y, a company that achieves economies of scale
  lowers the average cost per unit through
  increased production since fixed costs are shared
  over an increased number of goods. 

5
(No Transcript)
6
Natural Monopolies

• When one large firm provides all of the output.
  If a 2nd firm entered, competition would drive
  down the price and decrease the quantity.
• Example Public Water

7
Technology and Change

• Both can definitely change the natural monopoly.
• How did cell phones change the natural monopoly
  of telephones?? Be specific.

8
Government monopoly

• When the governments actions create barriers to
  entry in markets and create monopolies.
• A monopoly created by the government!

9
(No Transcript)
10
Technological Monopolies

• A patent is a way the government can give a
  company a monopoly.
• A patent is the exclusive right to a sell a new
  good or service for a specific time period.
• Why give a patent?

11
Why a patent?

• Patents guarantee that companies can profit from
  their research and develop new products for
  society.

12
Franchise

• A contract issued by a local authority to give a
  single firm the right to sells its good within an
  exclusive market.

What if SHS had this?
13
License

• When the government grants firms the right to
  operate a business.

14
(No Transcript)
15
Industrial Organizations

• In professional sports, the government allows
  team owners to choose new cities for their teams
  and does not charge them for violating laws that
  prevent competitors from working together.
• Case in Point! Browns move to Baltimore

16
(No Transcript)