Monopoly................................................................................3 Predatory Pricing....................................................................4 Conglomerate Mergers...........................................................5 Vertical Mergers....................................................................12 Horizontal Mergers................................................................14 Conclusion/Recommendations..............................................17 References.............................................................................18 What is a monopoly? According to Webster's dictionary, a monopoly is "the exclusive control of a commodity or service in a given market. Such power in the hands of a few is harmful to the public and individuals because it minimizes, if not eliminates normal competition in a given market and creates undesirable price controls. This, in turn, undermines individual enterprise and causes markets to crumble. In this paper, we will present several aspects of monopolies, including unfair competition, price control, and horizontal, vertical, and conglomerate mergers.Unfair CompetitionBarriers to Entry. In general, a monopoly by one company possesses the power to create barriers to entry for competing companies in a particular market. Also, once a company has achieved a loyal following, it then becomes easy for that company to maintain control of the market. Thus, leading to elimination of potential competition.Increasing Returns. In some markets, the profits for high volumes of goods are extremely exaggerated. For example, in the manufacturing industry, each product requires a certain material and labor cost to produce it. Large companies are often able to under-cut competitors prices, drive them out of the market, and then raise prices again.1 Consequently, this increased volume increases profit, allowing such companies an even greater power. Inc...
