In economics, are monopolies always considered bad?  

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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No, monopolies are not always considered to be bad in economic terms.  It is true that they are always inefficient in economic terms, but they are not always bad.  There are some monopolies that economists refer to as "natural monopolies."  These are markets in which a monopolist can actually provide a good or service to consumers more cheaply.  An example of this would be electricity.  In order for a company to deliver electricity to every home in a city, it must build power lines.  If there is competition, many companies must build power lines and each set of power lines serves fewer customers. This means customers would pay more in a competitive market than in a monopoly.  Therefore, not all monopolies are bad.

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nikasho0100 | Student, Grade 12 | (Level 1) Salutatorian

Posted on

Monopolies aren't always concerned bad. There are advantages of monopoly as

Economies of scale can lead to low prices to consumers due to low cost of production.

There can be new research and development thus introducing new techniques

The ability to compete with global market is  high.

Contributes to the GDP, employment and economic growth of a country.


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