Monopoly Power

Section A.  A few quotes to whet the appetite of those interested in the market structure we as economists call a monopoly.
Section B.  Relevant diagram - web links
Section C.  Comments on the diagrams’ web links

Section 1
Quotes to Whet the appetitie:
1. Our freedom of choice in a competitive society rests on the fact that, if one person refuses to satisfy our wishes we can turn to another. But if we face a monopolist we are at their mercy. And an authority directing the whole economic system would be the most powerful monopolist conceivable.
(Readers digest in April 1945 Friedrich Hayek’s “Road to Serfdom”)

2. Lord Acton (in a letter written in 1887) to Bishop Mandell Creichton “power corrupts and absolute power corrupts absolutely”

3. William Pitt in a speech to The House of Lords (1770) “unlimited power is apt to corrupt the minds of those who possess it”

4. Adam Smith in An Inquiry Into the Nature & Causes of Wealth of Nations (1776) “a monopoly is.. when a firm is able to charge excessive prices by deliberately keeping its market under stocked..”

5. Professor Paul Collier of Economics at Oxford University in his book The Bottom Billion (Why the poorest countries are failing and what can be done about it) “the poorest countries are being dominated by the richest countries so much so that these poorest countries are not just falling behind they are falling apart”.

6. Power has at last returned to the people, back where it belongs. We the people of the sixties were right.
(Kevin Roberts CEO of Saatchi & Saatchi Wed 24th October 2007 at HSM’s World Business Forum in Milan in his Speech “Loyalty Beyond Reason”)

Section 2
Graphs:
1. Standard Monopoly diagram     http://tutor2u.net/economics/content/topics/monopoly/monopoly_profits.htm  
2. Monopsony & TUs             http://tutor2u.net/economics/revision-notes/a2-micro-trade-unions-and-monopsony-employers.html                  
3. Natural Monopoly               http://tutor2u.net/economics/revision-notes/a2-micro-monopoly-economic-efficiency.html
4. Contestability and Monopoly     http://www.edexcel.org.uk/VirtualContent/70279.pdf
5. X - efficency and Monopoly     http://tutor2u.net/economics/content/topics/monopoly/monopoly_profits.htm

Section 3
Comments on Graphs:
1. Standard Monopoly diagram     Assume profit maximser (Quantity where MC=MR); Excessive prices; Lower quantity
2. Monopsony                     Minimise costs of employing factor (Quantity where MCf=MRf); Excessively low reward to factor; less factor employed
3. Natural Monopoly               Due to huge potential for economies of scale, needs of society, subsidise best contract offered bt private single regional
                                  provider or alternatively provide by the state. Any competition would lead to higher prices, productive inefficiency,
                                  duplication of resources and waste.
4. Contestability and Monopoly   Same as standard monopoly except the degree of potential competition due to ease of entry and/or exit would lead to
                                  the incumbent firm reducing price to a level to keep the competitors at bay.
5. X - efficency and Monopoly     Incentive for research and developent by a dominant firm is debatable. The potential therefor to be productively efficient
                                  in the longer term through new technologies and or techniques is low

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