From book Microeconomics " Brief Edition" No firm is completely sheltered from rivals; all firms compete for consumer dollars. If that is so, then pure monopoly does not exist. Do you agree?...

From book Microeconomics " Brief Edition"

 No firm is completely sheltered from rivals; all firms compete for consumer dollars. If that is so, then pure monopoly does not exist. Do you agree? Explain.

Asked on by ranger1980

6 Answers

justaguide's profile pic

justaguide | College Teacher | (Level 2) Distinguished Educator

Posted on

It is not true that pure monopolies do not exist. If the products being manufactured by a firm do not have a substitute and it is necessary for consumers to buy the products they have no option. There are no rivals present here and consumers are left with no choice other than paying what the monopolistic firm demands.

litteacher8's profile pic

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

Posted on

Yes, I agree. Even if you are the only company selling a certain product, people still have another option: buy something else. They may decide they can do without your product. There are a lot of uses for money competing for people's hard-earned dollars.
pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

This is only partly true.  Companies that have monopolies on things like cable TV have to compete with firms that provide other kinds of entertainment.  However, there are still monopolies that provide necessities like water and electricity.  Consumers cannot realistically chose not to buy from those firms.

kplhardison's profile pic

Karen P.L. Hardison | College Teacher | eNotes Employee

Posted on

At one point, utilities companies had government authorized monopolies in given areas that were "assigned" by federal regulation. This created whole monopolies in those areas though, since they were federally regulated monopolies, they wouldn't be called "pure" meaning created by market conditions. Federal deregulation of the utilities industry opened the industry to many more options and to the failure or partial failure of some utilities, such as Pacific Gas & Electric, for example.

literaturenerd's profile pic

literaturenerd | High School Teacher | (Level 2) Educator Emeritus

Posted on

I have to agree with enotechris. Based upon the "fact" that no firm is "sheltered" from all rivals, no one company can exist as a monopoly. A monopoly can only exist if no rivals exist. Outside of that fact, monopolies are illegal.

enotechris's profile pic

enotechris | College Teacher | (Level 2) Senior Educator

Posted on

Yes, with the caveat that all firms are competing on a truly level playing field, that not one firm is given some "special" advantage by government.  In a level market, there may be consolidation of firms and they may dominate the market (as did Microsoft) but they cannot completely control it. Monopolies only come about by coercion, which is not allowed in a free market.