Question

Why do you think market economies such as the United States encourage competition and discourage monopoly? Which do you think should be encouraged? How would your choice (competition or monopoly) affect you personally as a consumer?

Answer 1

The most obvious advantage of competition is that it contributes to the availability of products and services at competitive rates for customers. What people sometimes forget, however, is that manufacturers are customers too. To manufacture their goods, they must buy raw materials and electricity, telecommunications services to communicate with their suppliers and customers, computer software to keep track of their inventories, construction services to develop their plants and warehouses, and so on. To the degree that the prices for these products and services are higher than those of their international rivals due to a lack of competition in those markets, businesses would be less competitive and struggle on the marketplace.

One of the fundamental benefits of rivalry is that it allows companies to compete aggressively with respect to price and quality. While there are limited instances where low prices can damage competition — mainly when a company with market power attempts to push all its rivals out of the market by selling below cost so that it can act as a monopolist and increase prices to recover its earlier losses) — robust price competition is generally good for customers and lets business buyers compete more effectively. Competition agencies should be extremely reticent about challenging low pricing behavior, especially where engaged in by firms with no prospect for exercising monopoly power.

My choice as a consumer also would be competition

Competition policy, in turn, plays a key role in promoting competitive markets and stimulating economic development. Industries 'international competitiveness depends on access to cheap materials, improvements in quality and productivity, and creativity, all of which promotes competition. A well-constructed competition statute, backed by a competent competition enforcement agency, an economically sustainable regulatory strategy and a commitment to the principles