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Currently, there are numerous factors that are affecting markets and the entire economy across the world. Weather it is private or governmental organization, these factors have been facilitating market failure at an alarming rate hence, leading to the need of appropriate measures to prevent them and their effects on markets. Monopoly- a situation in which a single company or group owns all or nearly all of the market for a given type of product or service- is one of the major factors affecting markets today (Lele, 2007). There are numerous monopoly companies or organizations across the world including Google which in one way or the other has been affecting markets. This study is therefore, aimed at analyzing effects of monopoly (Google) on the market, and analyzes necessary solutions to this problem.
According to Lele (2007), monopoly refers to a situation in which a single company or a group- Google in this case- owns all or nearly all of the market for a given type of product or service. Monopoly has affected markets negatively in that suppose an organization has monopoly power, then it will not face high competition. Thus, it will be a price maker and its demand curve will be inelastic. Demand would only fall by a small percentage suppose it was to raise prices. Hence, monopoly is probable to lead to numerous effects.
Monopoly can lead to increase in prices and decline in consumer surplus as illustrated by the inelasticity of the monopoly-demand diagram. The monopolist is capable of reducing quantity supplied to increase the price (Lele, 2007). Monopoly leaves consumers with very less choice. Furthermore, monopoly companies or organizations will be capable of increasing their revenue and incur higher profits.
Orbanes (2006) asserts that the monopolies will have less enticement to reduce costs and manufacture at the lowest point of CA curve due to supernormal profit which they incur. Hence, they will be incompetent productively. Monopolies will cause allocative inefficiency with higher prices and less choice for consumers. Monopolies may experience diseconomies of scale if they get too big. Monopolies are also capable of using their monopoly authority to pay their suppliers lower prices.
In monopoly, companies and organizations make high profit margins. Thus, these profits can be spent on investing in research and development. This can result to the development of new products that can benefit consumers. Large output can be produced by monopolies. Hence, they can gain from lower average costs (Orbanes, 2006). This can be passed to consumers in terms of lower prices. Monopolies can be inefficient while firms can become monopolies due to the fact that they are successful and manufacture goods efficiently. Domestic monopolies might be essential to compete on a global scale.
The concept of monopoly has been clearly revealed in Google Company. Even though there are numerous search engines, Google owns all or nearly all of the market for searching and browsing, and general internet use. Google has dominated mail services, online calling and texting services, chatting, among other services (Orbanes, 2006). This has made it a giant company which has managed to suppress companies like yahoo. As a result yahoo is losing popularity and I am afraid that if nothing is done to control the situation, yahoo will be no more.
Google is coming up with new inventions daily with the latest being services of making online calls and sending text messages using mobile phones. However, in spite of these positive developments and innovations, Google has started to charge these services even ones which were provided freely by other engines. Furthermore, services provided by Google have less security since they are serving many people at the same time. There are increased cases of spam messages when using g-mail, service provided by Google.
Since monopoly has proved to be a big challenge on markets today, there is an urgent need to address it and ensure that it is controlled well. In order to reduce impact of monopoly on markets, governments should implement strict laws governing operations of companies and organizations (Kennedy & Waltzer, 2004). It should highlight framework under which all companies will be working. It should implement laws that will be preventing small companies and organization. Government should also be funding small companies so as to ensure that they are not suppressed by major companies who fear competitions, at an early stage. Development of many companies should be encouraged across the world.
This is because stiff competition is the main means that can be used to bring monopoly to an end. With stiff competition, there will be no unnecessary increase in prices and quality of goods and services produced and rendered will be of high quality. This is because in one company increases prices, consumer will turn to one with low prices hence forcing it to reduce price (Kennedy & Waltzer, 2004). Similarly, consumers will be always going to a company producing quality product. Thus, the main means that can be used to end monopoly is inventing, funding and protecting of many companies producing or rendering similar services. This will lead to high competition which will eventually lead to end of monopoly.