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Monopoly: Benefits

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According to DeMarco (2001), it is a common view that monopolies are not only economically objectionable, they are also ethically objectionable. Operating like a command-like structure, the monopoly blocks competition and distorts the markets natural mechanism's such as the ability to self-organize and self-correct.

As we have learned in previous business courses, economic inefficiencies, low costs, and market freedoms demand competition. If this is truly the case, then monopolies, by there very definition, are anti-competitive and therefore not able to provide efficiency, low cost, or market freedom. If we look at Manuel Velasquez's Business Ethics: Concepts and Cases, Mr. Velasquez argues that with competition comes justice and with justice, efficiency. So if monopolies reduce competition, then monopolies harm justice and thereby hinder efficiency (DeMarco, 2001).

But what if monopolies were not necessarily economically abhorrent. What if the argument for the relationship between competition and justice was questionable? Are there advantages to a monopoly?

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If monopolies were not necessarily economically abhorrent, and the relationship between competition and justice was questionable, there would be several advantages to a monopoly.
From the perspective of a country it is helpful to establish monopolies in different areas for utilities. For example, there are third world countries ...

Solution Summary

This solution explains how monopolies can benefit the economy. The sources used are also included in the solution.