Monopoly Market and Monopolistic Competitive Market Essay

Monopoly Market and Monopolistic Competitive Market - Essay Example Each potato chip market type has its own benefits and peculiarities. Monopoly A monopoly, including the Wonks monopoly, occurs if there are no competitors. There is only one seller of a certain product type or brand in the community. Likewise, monopoly occurs when there is only one product that serves a specific need or want. Monopoly crops up when new entrants are prohibited or cannot topple the obstacles to entering a market occupied by only one seller. For example, the school allows only the school’s own bookstore to sell the students’ required textbooks. The community’s only electric power company is a monopoly. States normally admit only one tap water entity to supply the community’s water needs (King, 2011, p. 355). Under a monopoly, there are significant hindrances to entrants to the monopoly market, especially with the potato chip industry monopoly. For example, legal barriers prevent competitors from entering the monopoly market. For example, the government only allows one company the license to operate within the community, city, or state. Some states offer a monopoly license to one company to serve the water, sewer, natural gas, and electric power needs of the constituents. In other states, the government operates monopoly liquor stores and lotteries. Likewise, the United States Postal Services has a monopoly license to deliver first class mail. ... The government can ensure more accurate collection of taxes. The government has to monitor only one company supplying the water, electricity, gas, mail, and other needs of the community. The government’s tax collection efforts will be easier. The businesses have to transact with only one company in a specific market segments. The business entity has to only contact one water supply company, one mail delivery agency, or one electricity provider, for their water, mail, and electricity needs. The consumers can easily locate the only entity responsible for the supply of water, electricity, and mail services. The stakeholders will have lesser time and difficulty finding and transacting with the monopoly company serving the needs and wants of the community. Pricing under the monopoly differs from the monopolized competitive market. The monopoly company can raise its selling prices without losing its current customer base. The customers have no other alternative but to pay the higher prices. The government can step in and set limits to the monopoly company’s price increases. The government can interfere when the monopoly company’s price increases borders on abuse of the customers. Government interference is required when the price increase does not equate to the improvement of the company’s current unfavorable service (Dudey, 1996). In terms of production, the monopoly enjoys exclusive rights to sell its products and services to the current and prospective customers. Microsoft is the exclusive seller of Microsoft computer software products (Gisser, 2001, p. 211). Microsoft is the sole seller of Windows XP, Windows Vista, and Windows NT software. The company’s monopoly of the Microsoft office software forces all computer users to buy