Question

What is monopoly? How could monopoly owners dominate the politics and economics (in Gilded age)?

Answer 1

Monopoly is said to exist when there is only one supplier in the market of a particular commodity which has no close substitutes. Under this market structure there are some barriers on the entry of the new firms into the market. Since there are no close substitutes and there is a single seller of the commodity, the monopolist has control over the price of the commodity. He is a price maker. A monopolist may charge different prices from different customers.

Gilded age was a period of rapid economic growth. Better transportation and upgraded technology were available in this age. With monopoly came industrialization. But labor conditions became harsh in America and also economic inequality increased. Only three main men were getting richer and richer while the rest of the people were getting poorer.

Rockefeller owned Standard Oil and held monopoly in the oil industry. He was able to capture the market through horizontal integration.

Carnegie held monopoly in the steel industry. He was able to capture the market through vertical integration. He became one of the wealthiest person in the world.

J.P Morgan held monopoly in the banking industry. J.P. Morgan was one of the wealhiest person and a great deal of control over America. He had a lot of influence on the government.

The monopolies during the Gilded age were almost dictating the market since there was no competition and hurting the sentiments of the consumers. The monopolists were very rich and had close contacts with the government. They had full control over the prices of their product and charged whatever they wished. The inflation rates were very high during this period and the consumers were in a terrible condition. The economic conditions of the consumers was deteriorating day by day.

This is how monopoly owners dominated the politics and economics in Gilded age.