Question

As a manager, would you prefer your business to be in a monopoly position or a perfectly competitive market? Why? Support your views with examples.

For your answer support your views/opinions (with at least two scholarly references and mention the reference them ), and a word count of 400 words.

If not follow the instruction above will rate your answer with thumb down.

Answer 1

As a manager, I would prefer my business to be in a monopoly position rather than in the perfect competition market.

This is because of the following reasons:

1) Monopoly firms are generally price takers.

2) Monopoly firm would in the position to charge a higher price from the consumer

3) Monopoly firm would earn supernormal profit in the short-run

4) Monopoly firm does not face any competition as there are restrictions on the entry of new firms in the market

5) There will be assured market for the good sold by the monopoly firm

6) The higher profit that would be earned would be used for research and development and improve the scale of production efficiency

7) There is a greater incentive to develop new technology and knowledge when it is a monopoly firm with patent rights.

8) There would not be duplication of set up plant for manufacturing unit as is seen in case of perfectly competitive firm and hence, those resources saved could be used for the different alternative uses.

9) By restricting output, the monopoly firm help contribute to the environmental cleanliness and protection

10) A monopoly firm has the flexibility to do price discrimination without worrying about losing customers.

The two citations are:

1) Abolghasemi Komleh, Ramin. (2018). A comparison between conditions of perfect competition market and pure monopoly in supply, demand, and equilibrium.

2) Yongmin Chen and Marius Schwartz, 2009. "Product Innovation Incentives: Monopoly vs. Competition,"