Arguments in Favour of Anti-monopoly Legislation Essay

What are the arguments in favour of anti-monopoly legislation and under what conditions might monopolies be allowed to exist? 1. What are the arguments in favour of anti-monopoly legislation and under what conditions might monopolies be allowed to exist? Before discussing the arguments in favour of anti-monopoly legislation and the conditions that a monopoly would be allowed to exist it is important to define monopoly and its market structure. It would be easy to define monopoly by considering the existance of only one firm in a certain industry. but the definition of industry is not always that specific. For example, BMW might have a monopoly in a specific type and design of a car but it certainly does not have a†¦show more content†¦A monopoly position in the industry is not created and maintained on its own though. There should be several barriers of entry for new firms high enough to block the entry of new firms. There are several types of barriers: (a) Product differentiation and brand loyalty. When a product is of such quality and type and is the only one that is associated with the customer for a specific purpose. This barrier can occur in a market where even two industrys are accumulating all the available economies of scale because the cost worries the customer less than the quality and fitness of the product. (b) An economy of scale. This is a situation where the industry cannot support more than one producer. Under these conditions, if two firms each charging the same price and supplying half the industry output they would both face a downward sloping demand curve. They would not be able to cover costs whatever the price. (c) Established monopoly firm. This barrier of entry refers to a firm capable of doing everything in the most efficient way in order to prevent the entry of a competitor. Production and marketing skills would be high, techniques, reliable and cheap suppliers would be commited, finance would be cheap and all that for a lower cost curve that would render any other firm incapable to compete. (d) Owing key factors of production and/or distribution outlets.Show MoreRelatedForever: de Beers Us Anti-Trust Laws2646 Words   |  11 PagesForever: De Beers US Anti-Trust Laws Case Study Presentation 6/29/2011 Group 9 – The Explorers â€Æ' Executive Summary For centuries, diamonds have been regarded as one of the most valuable commodities in the world and the industry has evolved into billions of dollars. At the top, De Beers dominated the entire industry worldwide, from exploration to retail selling. However, it has a reputation of a monopolist, where it influences supply and demand. The two critical factors that De BeersRead MoreThe Anti Eu Stance On The Icelandic Population Essay1898 Words   |  8 Pages(EU). 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