Understanding Monopolies and Their Adverse Effects on Regional and Global Economy

Part 1. THE THEORY:

Monopolistic Competition defined: A market situation in which there may be many independent buyers and many independent sellers; but in which competition is imperfect for several reasons:

• production differentiations
• geographical fragmentation of the market
• other similar conditions including market need, desire, practical product, customer service, or usages

This theory was developed independently by both U.S. economist Edward Hasting Chamberlain in his "Theory of Monopolistic Competition" (1933) and by the British economist Joan Robinson in her "Economics of Imperfect Competition" (1933).

Their theories took into account different scenarios in which each seller carries goods that have some unique properties in the eyes of the consumers, such as: brand names, special ingredients, customer service, geographical desirability, need, desire, or practical usage. So, these unique properties would therefore imply that each seller has a "Partial Monopoly".

They also analyzed:

• 1. "Oligopoly": which is characterized by an industry composed of a smaller number of large firms
• 2. "Discriminating Monopoly": in which a given item is sold at different prices to different customers.
• 3. "Monopsony": in which there is a single (monopolistic) buyer of goods produced by many suppliers.

Because the bulk of business in developed capitalistic economics is conducted under condition of product differentiation (oligopoly) the enthusiasm with which their analysis was received was understandable.

PART 2: THE TWO MAJOR TYPES:

• 1. ABSOLUTE MONOPOLY: The exclusive possession of a market by a supplier of a product, or a service, for which there is no substitute. Here the supplier is able to determine the price of his product without fear of competition from other sources of his, or substitute products. It is generally assumed he will choose a price that maximizes his profits).
• 2. PERFECT COMPETITION: The exact opposite of absolute monopoly. This exists when there are large numbers of sellers and buyers of a homogeneous (similar kind) of commodity. Each seller accounts for a relatively small share of the market. He cannot, therefor, influence the market price by varying his output, and he cannot increase his price above the market price because buyers would shift to other producers.

Although absolute monopoly and/or perfect competition are useful for illustrative purposes, they are seldom, if ever, seen in reality - where actual conditions range from one extreme to the other.

In common usage of the term "monopoly" it is often used to signify a state of which the degree of competition is restricted (but still present) whereas the term "competition" is used to denote a state in which competition is less restricted (but still not perfect).

The dividing line between the two is a question of definition by those who would argue for, or against, one extreme or the other.

In British anti monopoly legislation, according to which, a monopoly exists if at least 1/3 of the supply of a particular product, or service, is controlled by one enterprise, or by several enterprises acting in concert, with the intent of restricting competition.

Oligopolists often tend to act in concert, or when permitted, by law, to form cartels with formal agreements and prices and supplies - leading of course to that current state of our economy of being "too big to fail".

Those proponents in favor of monopolies give somewhat compelling, although unrealistic, reasons to justify their existence - all designed to leave that open end loophole to greed, power, control and unrestricted accumulation of personal wealth by exploiting others and the very system itself. They attempt to justify their stance by the following arguments:

• their false concern with the efficiency of scale in production
• integrated operations
• asserting that efficiency is raised
• production cost are reduced
• avoiding wasteful competition
• eliminating excess market capacity
• making for more meaningful long term planning
• rational investment and developmental decisions

Those proponents against these corporate allegations are the arguments that:

• because of its power over the market place - the monopoly is likely to exploit the consumer.
• they restrict production and variety
• they charge higher prices in order to extract excess profits
• the lack of competition may well work against efficiency and lowering production costs; with the result that the factor of production costs are not used in the most economical, safe, or eco friendly manner.

One of the main principles of free enterprise economic philosophies is that monopolies are, as a general rule, undesirable and "need to be strictly controlled".

PART 3: FAILED ATTEMPTS TO CONTROL AS PLANNED.

Most free enterprise economic systems have an elaborate framework of laws and regulations aimed at controlling monopolies. The oldest and the most vigorous monopoly control legislature is represented in the U.S. Anti Trust Laws consisting primarily of the Sherman Act, the Clayton Anti Trust Act, the Celler-Kefauver Act, and the Federal Trade Commission Act. All of which the GOP has tirelessly, and relentlessly fought to have overturned in order to provide their benefactors with greater control over the markets. This comment is not meant to be derogatory against one party or the other, as it is common knowledge that the GOP represents business enterprise before people, and the Democratic party represents (or used to represent) the people before business enterprises.

These Anti Trust Acts are (were) aimed at preventing agreements among suppliers (the effect of which would be to limit competition) and at preventing mergers between, and acquisitions by and of, firms (the result of which would be to lessen competition, or to create a monopoly).

These anti trust acts were "modified" several times to lessen the impact of government to limit and/or control the very thing that our government passed those laws for - to prevent Great monopolies that control everything. It would take a dozen lawyers to give an accurate account of what is remaining of those anti trust acts - and then there would be a dozen interpretations of exactly what those "modifications" legally mean. But, i can assure you with much confidence that those meaning would most certainly favor corporate America and not the American people.

The only conclusion I can come to is that all those "modifications" and "amendments" have had specific purposes in mind:

• to lessen the restraints put on "monopolies"
• to grant corporations and conglomerates more independence at self control
• to minimize the power of government to stop these from happening
• to minimize the penalties to no more than a slap on the wrist
• and worst of all, to protect them all (corporations, their leaders, and political flunkies) from any blame or harm done in the past, the present or in the future.

This move toward legal protection started its proliferation in full force with the Reagan Administration and has further progressed with each administration after him. Both parties are equally to blame for these atrocities against the public and they remain protected, under their own laws that were passed without public knowledge, or disclosure; behind closed doors and designed specifically to do just that - protect themselves.

We must NEVER allow monopolies to evolve to the degree that Corporate America is fighting so hard to attain via their (republican) political party. Their victory would prove to be even more disastrous than already is, and put a total end to our society as we have always known it; and fulfill the dream of those few in power to have absolute power and control over the lives, destinies, livelihoods, finances, freedoms and all that is good and just in this world.

It would lead to the complete control of our cosmos by that catastrophic, cataclysmic, cacophony of corruption at its climax.

by d.william 12/20/2011