Capitalist Economy
In a capitalist economy there are both wanted and unwanted monopolies. However, in a capitalist economy certain monopolies are needed. Monopolies have a big impact on the economy and the consumers because of the amount of control that the monopolies have on the economy. There are certain times when it is best to have monopolies then others, it really depends on the status of the economy. There is no doubt that monopolies do indeed play a critical role in a capitalist economy, but sometimes there are negative effects. It is indeed true to say that not all monopolies are unwanted in a capitalist society. An example of a monopoly that is not unwanted is that of a public utility, like SDG&E (San Diego Gas & Electric). These produce goods and services that are vital to the public's well being as far as functioning goes. Public utilities are an example of a pure or natural monopoly. A pure or natural monopoly is a single firm in an industry. This is the most effective way to provide very important goods and services. An example of a public utility monopoly that affects our everyday life is that of SDG&E. They are the only power company in San Diego County and thus they have a monopoly on San Diego. This, however is the kind of monopol
The impact of monopolies is felt very heavily on the consumer. The biggest effect of a monopoly in a market is that it drives up the prices of the product in that market (South West, pg. 179). This happens because there is no competition and no other producer to drive prices down. The government has often tried to break up monopolies when they are presented because it will put a negative impact on the economy. There has even been legislation passed against monopolies. An example of a piece of legislation is the Sherman Anti-Trust Act which stated "any combination or conspiracy in constraint of trade" (www.encarta.com). This law was passed in 1890 and immediately outlawed. Also, in 1914, the government passed the Clayton Anti-Trust Act, which made activities such as price discrimination and tying contracts illegal. This also forced a buyer or seller or deal exclusively with a particular firm (www.encarta.com). In recent news there has been the case of the Government vs. Microsoft. The US Government claims that Microsoft violated antitrust acts with its Window's operation systems (www.encarta.com). They say that Microsoft has a monopoly and they are right. There are no other operating systems (substitutes) out there for personal computers. In addition
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Approximate Word count = 847
Approximate Pages = 3 (250 words per page double spaced)
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