Courses and Consequences of Monopoly.
To start with, what is monopoly? Monopoly is a state of market where there is only one supplier faces many buyers. The monopoly is characterized by the lack of competition and high barriers for potential companies to enter the market. One of the most famous example of monopoly, and probable the biggest one in the world, is Microsoft. I'm sure that everyone here is quite familiar with Microsoft and many of you may even have bad feeling about this company, because we have to buy its software, windows without choice, since Microsoft is the only provider. So, no mater you like windows or not, you have to buy it as long as you want to use computer.
Then, what are the causes of monopoly? As far as I concerned, monopoly is mainly caused by several reasons, they are: the government policy, the ownership of an essential resource, information and economics of scale. .
The first reason is the government policy. Many monopolies are created by governments. Consider, for example, the Royal Mail in Britain. The royal mail is the only legal post office to deliver letters according to British laws, so there is no competition for them at all and they becomes monopoly. .
The second reason for monopoly is the ownership of an essential resource. The ownership of essential resource means that a firm may be able to control the market by acquiring control of that resource. For example, De Beers, a mining company that owns many diamond mines, have monopoly in the supply of diamonds for many years. .
The third reason for monopoly is information. A firm can be a monopoly if no one else has the knowledge to produce the product, or to produce it cheaply. Microsoft is the typical example of this kind of monopoly. Bill Gates invented windows software two decades ago and later, he got patent right for his product and thus he became the richest man in this world.
The last reason for monopoly is the economics of scale.
