4 responses 03/19

Chandini Work:

Thinking of monopolistic companies and brands, I select Microsoft, a technology company based in the US. It is the largest software company globally, with a few hardware and cloud services known. It is recognized mostly in Office's titles (most productivity suite) and Windows (most popular desktop OS globally). The company provides Windows, Office, Outlook, Visio, Halo, Skype, and visual studio software, Xbox, Surface, HoloLens, and input devices hardware, and Bing, Azure, OneDrive, and Outlook.com services. In Redmond, Washington, the company owns corporate offices and data centres.

I think the company is a monopoly business because they have dominated the whole world providing the services, hardware, and software, more so, the Windows and Office software. The company has dominated the market, making the competitors visible where there is entirety to the people. More and more people come in to use the products and services (Kosyakina and Podlesnaya 2018). The company ranks to pass other operating systems by 90% worldwide market. This company holds an enormous share in the market, leading to the economy of scale on the product development and the marketing compared to smaller companies where they pay more for products more than in Microsoft and sell for higher prices.

The company is a natural monopoly where the company can conquer the market entry and has dominated it has been challenging to overcome. The reasons why the company remains to a natural monopoly are several. First, the company ensures uniformity in the software, making it the most effective software as the users learn fast how to use the software. They understand which other companies try to make their software closely similar to Microsoft's. Also, the company provides better product options with the lowest prices in the vast economy (Saglam 2016). Software development incurs a low cost of production that has a low variable production cost. And there is more convenience in the production than there is in the smaller companies. Finally, the company has significant market shares in the market for software production. That leaves them the full say in the market and gives them the power to control any output of products and their prices in the market.

A company being natural monopolistic remains to have many advantages in the competition and has no match. Lack of competition makes it difficult to entertain a new entry of a competitor in the market. The company will rule the market through the prices, and the production of a new product with a lower consumption can never make it with the low prices (Altan 2020). The company stands to be competitively above the standards. Making legislation to regulate the market for a monopoly market like this one is difficult because there are no comparing its products and services to others, leading to acceptability, which makes more profits to the company with oppression.

 

References

Altan, Basak. 2020. "Dynamic Durable Goods Monopoly And Market Power". Games 11 (2): 22. doi:10.3390/g11020022.

Kosyakina, Anastasia, and Alina Podlesnaya. 2018. "Counteraction To Monopolistic Activity In The Field Of Software On The Example Of Cases Against Microsoft". Scientific Research Of Faculty Of Economics. Electronic Journal 10 (2): 29-52. doi:10.38050/2078-3809-2018-10-2-29-52.

Saglam, Ismail. 2016. "Regulating A Manager-Controlled Natural Monopoly With Unknown Costs". Managerial And Decision Economics 38 (6): 792-805. doi:10.1002/mde.2817.

Dushyanth Work:

There are two broad classifications of monopoly, Legal monopoly, and regulated natural monopoly (Stocchi et al., 2017). A natural monopoly emerges due to the high cost of setting up a parallel organization or a certain organization enjoying high Economies of scale. The two factors act as entry barriers for any potential competitors. Unlike Natural monopoly, the law protects legal monopolies. AT&T Corp gives a classic example of such an organization. In this context, I will use the Facebook Company to argue an instance of monopoly.

Plausibly Facebook has succeeded in being dominant and the world is leading social networking company and its monopoly in offering individual social networking provisions. The organization's monopoly has seen it generate staggering profits over any other social networking organization (Srinivasan, 2019). Various reasons categorize Facebook as a regulated natural monopoly. First, the company mainly serves as the main or the single specialized social networking provider. Recently Facebook has been acquiring emerging competitors who seem to threaten its monopoly. The accusations are mainly anticompetitive, intending to neutralize any new entrants to control the market prices. Facebook successfully acquired Instagram in 2012 and WhatsApp in 2014, fearing that the mobile messaging app could improve on their game and under more features to outdo them in the market (Srinivasan, 2019).

The acquisition has helped the company to enjoy the economies of scale and control their prices in the social networking arena. For instance, advertisers are left with limited options to select from hence will pay according to the terms offered by the company, which leads us to other traits of a monopoly where firms are able to keep within their profit maximization function. Consumers of individual social networking services are limited within the Facebook parameters; advertisers also cannot enjoy the competition's benefits in this industry. Additionally, the company's imposition of anticompetitive measures to the developers neutralizes threats to its monopoly as the single dominant seller.

All these factors range from entry barriers, single seller, economies of scale, profit maximization, and price discrimination, making Facebook a monopoly organization and precisely a regulated natural monopoly (Hawley, 2015). The company enjoys high economies of scale, and any emerging competitors would require huge financing to offset the company's status. The company’s monopoly outcrops naturally without any legal intervention.

 

References

Hawley, E. W. (2015). The New Deal and the problem of monopoly. Princeton University Press.

Srinivasan, D. (2019). The antitrust case against Facebook: A monopolist's journey towards pervasive surveillance in spite of consumers' preference for privacy. Berkeley Bus. LJ, 16, 39.

Stocchi, L., Pare, V., Fuller, R., & Wright, M. (2017). The Natural Monopoly effect in brand image associations. Australasian Marketing Journal (AMJ), 25(4), 309-316.