'Overview of Monopoly Power'
Monopoly means one-seller. Power means the ability to produce something. Dr. Per Bylund is arguing in this prerecorded lecture that monopoly power is not a bad thing. Without monopoly, there would be no innovations. ‘Monopoly’ simply describes the number of businesses, but ‘power’ is where people really have an issue with the idea. For example, Dr. Per Bylund explains that although there were other technologies before Apple, they have had more influence over the rest of this market because of their specific iPhones and other products. You could buy a flip phone instead, but they have an influence over consumers because of the power they hold in the technology market. The way that a market diversifies and grows is by a monopolist who takes the first steps to producing a certain product and then influences others to follow. Just because someone has something you want very badly, it does not mean that they hold power over you, although it can. If an innovator does not evolve with society, they essentially go away. For example, the flip phone market has almost diminished compared to 20 years ago because smart phones have taken over the technology market.
'Not a Monopoly'
On the other hand, Netflix began the ability to stream movies, tv shows, etc. over phones, tablets, computers, and tv’s, but there are many other apps that do the same thing now. HBO Max, Prime Video, Hulu, and Disney Plus are some examples of these apps that joined this specific market. Because of this, Netflix is not considered a monopolist since it is not the only company who streams movies and tv shows.
'Creating a Monopoly'
If a monopolist raises prices, it allows others to enter the market by producing a similar product at a much cheaper price for consumers. The way to create power within a monopoly is by producing a product that others cannot replicate and therefore cannot enter the market. An example of this in real life is a utilities service such as a garbage route. If they raise the prices for their service, you cannot do anything to avoid this besides simply paying for it. No one is allowed to enter or to compete with something like this. The government has given this specific company the power to be a monopoly where no one can enter this market and drop the prices. Hospitals within a big city are also an example of this. Even though there is more than one hospital, no one else can enter this market and these businesses can all collaborate by providing the same services and raising their prices all together. This ensures that not one of these hospitals will miss out on business due to their prices being too expensive or not providing the same services since they would all be the same in these regards.
'No Value Will Disappear'
Most big businesses disappear because of entrepreneur innovation, if it is allowed in the specific circumstance. In other words, they do not provide enough value to consumers and entrepreneurs enter the specific market to counter their services/products at a better value or price. The ability to provide value to consumers is more important than the size of the business itself. This will determine whether the business will be able to stick around or if it will go away. The people decide what is valuable within a business, service, or product and what is not valuable within these things.
'Negative Attributes'
There is one thing that can be a negative effect of monopoly power. Someone trying to produce something or begin a market could try to produce their product as fast as possible to get the security from the government that they are the monopoly in that industry, instead of focusing on the value that they are bringing to their potential consumers. This could be because of other competitors trying to enter the market first and earn the title as the monopoly instead.
'My Perspective'
Overall, I feel that monopoly power is not a bad thing. As I mentioned above, I believe the only reason people sometimes feel that they are a negative thing in society is because of the word ‘power’ involved in this concept. Essentially, the power that a monopoly holds lies within a product/service that people want very badly that they cannot get anywhere else besides this specific company. The extinction of monopoly power would ultimately result in the extinction of innovation as well, which would not be a beneficial thing for society and consumers at all! If that were so, we would not continue to develop new ideas, items, etc., which essentially make up a huge part of our lives and help to benefit us in our daily lives. Some may argue that these monopolies can raise the prices to be outrageous, but if they did not create enough value within their business, consumers would simply not purchase from them. Furthermore, because they are a monopoly, they can charge low prices as well because of the average costs being lower. An example of this would be a tap water company in a country. It would not make sense to have multiple companies laying pipes and sewage systems in one country because of the extensive costs that are associated with this specific business. Instead, only having one company that does this within a country would allow the prices to be lower for their consumers. This will encourage this monopoly to continue creating new products that will bring more value to their consumers. If they don’t continue doing this, they will lose their place within the market and eventually go away.
'Image Source'
Coy, Peter. “Economists Say the Rise of Monopoly Power Explains Five Puzzling Trends.” Bloomberg.Com, Bloomberg, 12 Feb. 2018, www.bloomberg.com/news/articles/2018-02-12/economists-say-the-rise-of-monopoly-power-explains-five-puzzling-trends.
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