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Google and its Monopolistic Tendencies

When is an industry competitive and when is it monopolistic? Read the article below about Google and its "monopolistic" tendencies. http://online.wsj.com/article/SB124156244115989189.html

1) All of you have used Google. Do you think it's anticompetitive? Why or why not?

2) Do you feel you have a good substitute product for Google? Why or why not?

3) Do you think the Antitrust Department should punish Google for being a "monopolist"? Did the author of the article think so?

Solution Preview

Hello Student,

Before you begin to answer the three questions given which relate to the article, the first thing you may want to do is make a distinction between a competitive industry and a monopolistic industry. This distinction may be made by looking at the characteristics of each. A competitive or perfectly competitive industry is normally charcterized as one with many buyers and sellers - who are all knowledgeable of the market and or market information; the products within it are homogenouse or similar; and there is no barriers to entry or exit to such an industry, which means competitors are free to enter and leave the market and/or industry. A monopolistic industry, on the other hand, is often characterized as one where there is only one seller or very few sellers of a particular product or service within the industry; there is also very little competition or its very hard to find a substitute for this product or service - as a result the seller or few sellers normally dominate this market. A monopolistic market is also characterized as one in which there is barriers to entry and exit within the market, unlike under a competitve industry. (Note all of these characteristics are embedded in Google, hence making it a monopoly)

The first question asks you whether ...

Solution Summary

This solution provides you with detailed information about first, the characteristics that may be used to differentiate a monopolistic industry from a perfectly competitive industry. Secondly, a look is taken at various types of anti-competitive practices to determine whether Google is anti-competitive or not. Also, substitutes to Google are mentioned in this solution; in addition to views as to whether or not Google should be punished by the Anti-trust Department.

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