Question

Case study of Monopoly

Microsoft(MSFT) has been accused of violating the Anti-trust law time to time. MSFT had the legal problem with European Community(EC).

Q1)Do you think Monopoly business practice is so bad for the general public's welfare? why? or why not? Explain based on cost and benefit analysis of social welfare.(0.5 point)

Q2)Do you think FAANG companies are Monopoly? FAANG are Facebook, Apple, Amazon, Neflix and Google. Do you think Government should regulate and break up these FAANG companies? (0.5 point)

Q3)Would you give us another notorious example like Monopoly case in the past or present (such as Standard Oil, Morgan House, OPEC with high energy price, lately case of INTEL)? Your Monopoly example should be based on high concentration of market share and high abnormal profits.(0.5 point)

Q4) Is the current Anti-trust law outdated ? why? For example, Sherman Act of 1890 has only 769 words.(0.5 point)

Q5) if so, what reform is necessary for the current anti-trust law? (0.5 point)

Please answer all five questions with at least 3 sentences each.

Answer 1

A1 - Monopoly is the type of competition which has single power of fixing their own prices for the unique featured products. It actual brands the products in a special way that the consumers may choose their options to buy due to its reliability and quality. But most of the consumer will opt for price which lies under their budget. But in the monopoly market, consumers are restricted to buy the price as it was fixed more than the price what they had expected. This situation leads to reduce in the consumer surplus. In the monppoly market, the rate of output are also not increased to the cosiderable effect. So productive inefficiency takes place in the monopoly market. The Wefare of the customers in the society is vested with how much they get benefits in form of purchasing the goods at the nominal cost and helps to increase their savings in the form of transanctions in the Monopoly Market. Henceforth we can confirm the fact the Monopoly business practice is very bad for the general's public welfare.

A2) FAANG companies are Monopoly in Nature. Monopoly power will not ruin the optimum level of output of production. It will directly poses the umemployment problems. When certain companies have running the business with having large amount of paid shares, then the opponet companies will need to compete with those powerful companies in the capturing the market. In order to capture the market, it need to concentrate on cost-cutting projects. As a result excess employees are made lay-off from the service in order to increase the output with miniumum labour cost. It leads to low per-capita income of the country in which rate of the unemployed rate is huge. Then it affects the economic development. So in order to reduce those bad effects of monopolist power, Governemnt should regulate the laws to break up these FAANG companies.

A3) - Among best meat producers in the world, Tyson Food company is top and best one in America. Tyson company is considered as a Monopolist company in nature for following reasons. Tyson company has its own source of production units. It need not to depend upon other small firms in order meet its production requirements like Slaughtering the beef, Boiling, Cows shelter park and keeping separate Truks to deliver the goods within stipulated time. Those requirements are duly fullfilled by its own means of sources. The above sources reduced the cost of production and determined the price level at very high stage. So the shares of the Tyson company was rose up to very high level. All shareholders are interested to hold the shares of Tyson company which earned abnorma profits right from 2008.

A4) - Anti-Trust law is outdated now. The enforcement of this law is purely depends on the situation of how far the US Government is framing the strict ordinance to clear the difficulties faced on ground of existence of the monopolist form of market competition prevailing in the market. Unlike Sherman Act of 1890 failed to curtail the problem of monopoly, The Anti-Trust law should be re-inforced to eradicate the power of monopoly along with the rule of eradicating the problem of unjustice act of employers on labour unions.

A5) - Industrialized monopoly power and unjustice act against labour unions should be the main motive of Anti-Trust law. This will give some picture to the Anti-trust law to do its duty effectively with the support of US Government. The Law should be enacted to impose the high penalties to those monopoly companies which break the rules for the Anti-Trust law. If the above points are strongly monitored then the possibily of enforcing the anti-trust law will be effective.