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Essay / Research Paper Abstract
A 2.5 page paper that begins by describing what a monopoly and an oligopoly are. The writer then discusses the typical barriers to entering an industry and which of the barriers foster a monopoly or an oligopoly. The writer then comments on when a monopoly would be socially justifiable. Bibliography lists 4 sources.
Page Count:
2 pages (~225 words per page)
File: MM12_PGmnpol2.rtf
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Unformatted sample text from the term paper:
words, competitors within the industry pursue their interests but do so in such a way as to benefit the entire industry (Porter, 1980). A monopoly exists when a company
has the power to name ones price for a product and the company does not need to be concerned that consumers will seek a lower price elsewhere (Kirzner, 2000). The
company that holds a monopoly or near monopoly controls the market for a specific product (Kirzner, 2000). Monopolistic competition is described as being between oligopoly and perfect competition. It is
a market in which a number of companies hold market power. For example, McDonalds holds a greater share in the fast food industry but this is not the only company
that has high sales. It is possible to enter this market but it is difficult to unseat the leaders (University of Massachusetts, 1998). There are many companies that hold the
lions share of the market but they are not monopolies. There is still enough competition to limit any type of exploitation of their market position. There are numerous barriers
to entry into any industry. These include capitalization, legal regulations, supplier power, consumer power, competition of established companies in the industry, advances in technology, the number of companies already in
the industry and their market positions, human capital, and more (Basto, Noyola-Picazzo and Orsini, 1998). To enter an industry, the new owners must have sufficient capitalization, they need
enough capital to open a company. The owners must be aware of any laws and regulations applicable to the industry and to their individual company. Supplier power can be another
strong barrier because, obviously, the owners need to negotiate a good price on materials and equipment. The company then needs to offer value-added products and/or services in order to entice
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