American Public University
Many of the economics books inform us that perfect competition is better than uncompetitive markets because it enables the markets to use the resources efficiently. In the perfect competition markets, producers give importance to decrease costs and increase the quality of products because the market price is given and their profits are limited with this given price while, in the uncompetitive markets, the companies play a game to maximize their profits theoretically. Monopoly is the worst version of the uncompetitive market because there is one dominant company in a market and the entry to the market is not possible. Theoretically, the monopolist company uses resources inefficiently, and it harms the national economy while implementing quite high prices to its customers (Krugman, 1979).
However, in the development economics, we see a radical approach to this issue. Monopolization in an industry is sometimes desired and even supported by the governments because a powerful monopoly in an industry might enable the country to increase its market share in the international trade arena. For instance, in the software market, Microsoft is a giant, and this company dominated the software market for a long time, and the US could receive benefits from the software trade.
The new president of the US, Donald Trump, is a big fan of this radical economic development approach. He expressed during his campaign that he will allow the big mergers in the US to create huge and powerful companies to have relatively more market share in the international trade. He believes that this will create a new and powerful American economy by providing employment and business opportunities for the Americans. Although it sounds a little strange and scratches our ears, the American economy is one of the largest economies in the world, and it might be possible that the active American companies can dominate the global economy. Especially, the large American companies can compete with the government-supported Chinese companies in the global arena (Talbot-Zorn, 2017).
References
Krugman, P. (1979). Increasing returns, monopolistic competition, and international trade. Journal Of International Economics, 9(4), 469-479. http://dx.doi.org/10.1016/0022-1996(79)90017-5
Talbot-Zorn, J. (2017). Will Donald Trump Be the Most Pro-Monopoly President in History?. The Nation. Retrieved 30 January 2017, from https://www.thenation.com/article/will-donald-trump-be-the-most-pro-monopoly-president-in-history/
