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Monopoly and Competition in U.S.A.

Monopoly Is a term in economics that describes how a specific individual or a company has gained control over the provision of a particular service or product in a way that they determine the terms and conditions of how other individuals will have access to these products or services. On the other hand, competition is whereby there is a contest between individuals or companies for the provision of products or services whereby the price is set by the market itself and the other individuals determine the terms by which they will access these products or services. So competition is where two or more individuals/companies strive for a specific goal that cannot be shared. In business, competition always arises as most companies are in constant competition with one another over the same group of customers.

In the quest to remove monopoly, the United States of America came up with the competition law. This law’s aim is to maintain and promote healthy market competition through regulation of anti-competitive behavior. In the U.S.A, it is also referred to as the antitrust law. According to Kenneth, the U.S.A has the longest history and the toughest policy of anti-monopoly. This monopoly policy is strictly based on structural approach unlike the U.K. one that is based on cost-benefit approach (407). The U.S. monopoly policy started in the 17th century with the Act of Sherman of 1890. This act clearly states that “Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any person or persons to monopolize any part of the trade or commerce among several States, or with foreign nations, shall be found guilty of a misdemeanor” (409). However some kind of monopoly can be found not to be illegal in the U.S.A if it comes through cost saving, innovative and product improvement policies rather than anti-competitive strategies.

Another example of monopoly and competition is that given by Richard. He tries to describe monopoly and lack of competition in the telecommunications industry. According to Richard, monopoly has been considered to be natural in the telecommunications industry (21). He describes how one company can be able to produce more services by use of a few resources compared to a group of companies using same resources and producing less output. Thus monopoly is no longer natural in telecommunications but it is rather driven by technological change and innovations. For example the use of electrical wires to string telephone wires thus telecommunication traffic can be carried through electricity networks, and also technological advancement such as use of microwaves. Even if theoretically a single company can provide telecommunications services more economically than several competitors, such a theory cannot be achieved in practice. This is because of monopolies making bad decisions such as choice of investment plans and technologies, neglect of the consumers by favoring the investors and staff or basically become lazy.

Therefore the competition between several companies seems more viable in practice than a monopoly because competition is a sure and efficient way of making companies lower their prices and basically improve the quality of their services and their service delivery. Thus according to Terry, democratic nations tend to favor the producers more than the consumers and so in the U.S.A pro-competition policies are implemented and highly guarded whereas monopoly policies has been abolished and deemed illegal except in some special cases where by they bring innovation and technological advancement (122).

Works Cited

Kenneth, Caroline. Industrial organization: competition, growth, and structural change. 408. Routledge Press. New York. (2000). Print.

Richard, Cristina. New Media, new policies: media and communications strategies for the future. 23. Polity & Blackwell Press, (1996). Print.

Terry, Angela. Competition in theory and practice. 122. Croom Helm ltd.USA Print