Why are monopolies bad?

Question

The only time I could see a monopoly being bad is if it was a necessity like air or water. If the company raises the price of anything else too much, people will either stop buying it or shop for a similar product.

? · Answer

If they have a monopoly there is no similar product. You PAY.

RoVale · Answer

Lack of competition, fewer options for consumers, more expensive.

sunshine_mel · Answer

If there's a monopoly, there aren't other options for people to buy it somewhere else.

? · Answer

Because the consumer will have a smaller consumer surplus while the producer can maximize his profits still. The price will be set at mc=mr which is higher than mc or the price in the perfectly competitive market.

Anonymous · Answer

You literally answered your own question. The point of stopping market monopoly is so that consumers have choice. You ended by saying people will shop for a similar product. But if a company monopolizes a market, from where would they find a similar product? That's the point, variety and choice for the consumer. This, in theory, drives growth and development of new businesses. If they have a chance. That's what anti-monopoly laws are supposed to protect.

choko_canyon · Answer

You just said why; it allows a company to raise the price and hold the consumer hostage because in a monopoly there IS NO similar product available. A monopoly means the company owns and controls all the desirable versions of any product or service.

Why are monopolies bad?

6 Answers