The DOJ’s argument was that since Microsoft possessed an extremely high market share in the industry for operating systems, the inclusion of a free web browser constituted unfair competition to other browsers, such as Netscape Navigator. Some new drugs are produced by only one pharmaceutical firm, and no close substitutes for that drug may exist.įrom the mid-1990s until 2004, the DOJ prosecuted the Microsoft Corporation for including Internet Explorer as the default web browser with its operating system. In some communities, there may be only one provider of electricity and only one garbage collection company. Postal Service has a monopoly over first-class mail. Department of Justice (DOJ) uses.Įven though there are very few true monopolies in existence, we do deal with some of those few every day, often without realizing it. This tends to be the definition that the U.S. While a monopoly by definition refers to a single firm, in practice, the term is often used to describe a market in which one firm merely has a very high market share. Since a monopoly faces no significant competition, it can charge any price it wishes. In the case of monopoly, one firm produces all of the output in a market. If perfect competition is a market where firms have no market power and they simply respond to the market price, monopoly is a market with no competition at all, where firms have complete market power. In this chapter, we explore the opposite extreme-monopoly. Think about it this way: If you very much wanted to win an Olympic gold medal, would you rather have few or no other athletes in the competition or face many athletes that are just as good as you? Similarly, if you would like to attain a very high level of profits, would you rather manage a business with little or no competition, or struggle against many tough competitors who are trying to sell to your customers? By now, you might have read the chapter on Perfect Competition. There is a widespread belief that top executives at firms are the strongest supporters of market competition, but this belief is far from the truth.
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