Is Monopoly Always Bad?
Monopoly is not a desired fact in the markets. Many believe that creating competitive markets will help us develop relatively better services and products. Depending on this idea, many of the countries have created legal regulations for getting rid of non-competitive conditions. Therefore, creating non-competitive conditions is prohibited.
However, monopoly is required for the companies to make relatively higher products. In another word, every company needs to develop a way to create loyalty among its clients and having this loyalty or this power means creating a monopolistic power for the company. Therefore, being monopolistic is a desired situation for many of the companies. Also, it is possible to claim that being monopolistic is in the human nature.
Even though monopoly is not desired in the markets, sometimes monopoly might create relatively better results. For instance, in the pharmaceutical market, we need strong companies because the research and development works require the very high level of expenditures and only the companies with a large amount of capital can make these expenditures. Consequently, a monopolistic pharmaceutical market might create a high level of capital accumulation for a company and this company might produce very crucial medicines for important sicknesses.
The largest monopolists in the economies are the governments. The governments can produce the public goods in a monopoly market that is created by the laws. There are three kinds of goods: 1) pure public goods, 2) private goods, and 3) private goods and services with high positive externalities. The governmental institutions have to produce the pure public goods while it is not suggested that the governments produce the private goods. Therefore, for the pure public goods and services, we need the government to produce it. For instance, national security service can only be produced by the national armies because it is highly costly, and no private company would like to invest in this industry.
References
Koenig, R. (1996). Pharmaceuticals Industry: Giant Merger Creates Biotech Power. Science, 271(5255), pp.1490-1490.
Rosen, H. (1985). Public finance. Homewood, Ill.: R.D. Irwin.
