Question

⦁   What can be done to eliminate problems with a monopoly (if anything)?

Answer 1

The government may wish to control the monopolies in order to protect consumer interests. Monopolies, for example, have the market power to set higher prices than those in open markets. Government can control monopolies by: price capping–restricting price growth Mergers legislation Breaking up monopolies Nationalization of monopoly inquiries and unfair practices–government ownership.

Prevent overpricing. Without government control, monopolies may put prices above the equilibrium of competition. This would result in inefficiency in the distribution and a reduction in public welfare.
Service standard. If a corporation has a monopoly over the delivery of a specific service, there might be little motivation for it to provide high quality service. Government oversight will ensure the organization meets minimum service requirements. Control over monopsony. A business with monopoly sales power could also be able to exploit monopsony buying power. Supermarkets, for example, will use its dominant market position to squeeze farmers ' profit margins.

Monopoly will always strive to set the highest price it can get from the consumers, in order to gain minimal benefit. Through controlling the revenues and costs, the state will regulate the monopoly and ensure that the business does not gain excessive income. But it's also not really successful and can't really be put into action. We know the cost of production is very difficult to calculate, since the monopoly can never offer a correct picture. Similarly it won't like giving out trade secrets either. Then, getting some profit margin uniformly for all goods, across the world, is also hard.

The government's last resort is to nationalize the sector in which there is monopoly and the population is not able to tolerate it. Yet again the issue with this scheme is that the government has minimal economic capital and only a few companies can nationalize. Likewise, it must take into account the essence of the asset when nationalizing it. Unless it is of public utility then it may automatically go into nationalization, otherwise it will be forced to wait for nationalization until such time as resources are available.