Question

We learned in this section of our study that Monopoly is not widespread because barriers to entry are seldom completely successful. We also learned that they are unsustainable over a long period of time, because of emerging new technologies. Look at what you can investigate and analyze if such evidence is correct or not. Use your analyses and argue for and against antitrust laws. Do we need antitrust laws or companies and market forces will bring them along and correct any problem that may exist and please give evidence in support of your ideas and propositions?

Answer 1

Answer

True, Monopolies may not be sustainable for a long period of time as market corrects itself every now and then. However, monopolies may exploit their customers for quite some time until a new technological advancement is made. This time period when monopolies are extremely exploitative can hurt the customers. Therefore certain antitrust laws are required to protect the businesses and consumers.

There exist Government bodies that do not allow mergers that might become a monopoly and start exploiting the market. For example- The The Herfindahl-Hirschman Index (HHI) is a commonly used index by the government to determine whether mergers should be allowed or not.

However, generally the antitrust laws may not be required even.

For example- The advent of new technology, especially fracking in the United States, has had a major effect on worldwide oil prices and has lessened OPEC's influence on the markets. As a result, worldwide oil production has increased and prices have dropped significantly, leaving OPEC in a delicate position.

This shows how market itself lead to the monopoly looking cartel of OPEC to break down.