Are monopolies a good thing? Why or why not?

Expert Solution

Monopoly as we all know is the market where there is only one seller and large number of buyers

price id decided by the only seller

there are barriers to entry and exit in the market

Monopoly sometime is good because It promotes

research and technology

it is also good for producing at economies of scale due to only seller in the market

however some time it is not good in the market because it kills the competition and this will cause a disbalance in the equilibrium of demand and supply

Herfindahl hirchman index which is used to calculate the market concentration and if it gives the value between 2500 to 10000 then the market is said to be moving towards monopoly

Government also tries to limit this monopoly to have a good market for the producers as well as for the for the buyers

In US ,it is limited and a regulatory authority watch over it

so monopoly is beneficial for the society upto a certain limit but not totally

Rahul Sunny answered 1 year ago

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