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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?

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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.