Benefits of monopolyhow does consumer benefit from monopoly? discuss

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litteacher8's profile pic

litteacher8 | High School Teacher | (Level 3) Distinguished Educator

Posted on

A consumer never benefits from a monopoly.  The consumer benefits from better competition.  I would say the only exception is government control of necessities like milk and energy.  In that case, there could be a benefit because there would  be no price gouging.

e-martin's profile pic

e-martin | College Teacher | (Level 1) Educator Emeritus

Posted on

The above post makes a good argument for the benefits of monopoly. The specific benefit of monopoly in the area of utilities is often recognized by local governments. Municipalities often grant monopoly rights to electric and water companies in a given area. 

This once was the case in phone service as well, but as advances have been made in transfer technology (I'm not sure if that is exactly the right term...), monopolies in this particular utility are becoming less common. They still exist, but seem to be losing traction, as you might see in your own area if you can get phone, internet and cable service from various service providers. 

Competition in the area of phone/internet/cable seems to be beneficial to consumers, driving down prices. 

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

Consumers benefit from monopolies only when those monopolies are "natural."  There are some businesses in which the economies of scale are so great that a monopoly will be the most efficient market structure.  This allows customers to have the lowest possible costs.  For example, imagine if there were competing water companies and each had to build their own network of pipes.  Each set of pipes would serve fewer people and therefore each person would have to pay more than if there were only one set of pipes owned by a monopoly.  In situations like this, a monopoly allows consumers to have lower prices.

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