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Provide a 6 pages analysis while answering the following question: Microeconomics: Monopoly. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required.
Provide a 6 pages analysis while answering the following question: Microeconomics: Monopoly. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. “In the absence of government intervention, a monopoly is free to set any price it chooses and will usually set the price that yields the largest possible profit” (Stigler). Microsoft is one of the popular examples of monopoly. It should be noted that Microsoft can charge any prices to their operating system software such as Windows 7 since no other organization has the power and capabilities to challenge the monopoly of Microsoft in the market.
Smaller firms may find extreme difficulties in surviving in monopolistic markets. Usually, the monopolistic firm will acquire smaller firms in order to avoid the possibility of even small competition. In short, monopoly is a good market condition for the organization, but for the customers, it is an unfavorable market condition. Based on the nature of monopoly, it can be classified into different categories such as technological monopoly, natural monopoly, near monopoly, oligopoly, legal monopoly, governmental monopoly, etc.
Technological monopoly refers to the ability of a firm in dominate global market because of its technological excellence. Microsoft is the best example for this category. No other firms in the world was able to challenge Microsoft’s superior technologies in operating system market. Even though Apple and Linux raised some challenges, they failed miserably in defeating Microsoft. Microsoft did so many things to establish their technological monopoly. They established a strategic collaboration with up Intel to use Windows operating system in their PCs.