The Advantages And Disadvantages Of Monopoly And Economic Development

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Monopoly and Economic Development There are many factors that can promote economic development, such as government policies, high technology and free competition. However, monopoly can lead to economy to be demoted, and so economists have discussed the disadvantages of having monopolized market. According to Linfo, “Monopoly is a term used by economists to refer to the situation in which there is a single seller of a product (i.e., a good or service) for which there are no close substitutes.” It also states that monopoly could have negative effects on a country’s economy as overall. For example, according to EconomyWatch, Germany is one of the most developed and strongest countries in terms of economy, and it has the perfect market competition.…show more content…
Although it takes huge investment to keep up with using high technology in producing the goods and services, it is at the firms’ benefit to do so because using such technology helps the firms to meet the customer satisfaction to high extend. Using high technology would also help the company to reduce the cost of their manufacturing goods in the long run so that they can offer the products and services to the customers for lower prices. Consequently, they can compete globally. However, in a monopolistic market, this cannot be seen obviously, and the firms would rather use the old Technics because those Technics do not need to additional investment, such as replacing them with new tools or high technology. For example, in Kurdistan, the monopolistic firms, such as electricity-companies are still using the traditional ways to generate power. The disadvantages of using such ways are costly and not sufficient amount to fulfill the ultimate customer needs. According to Ekrd Daily, “Nechirvan Barzani, announced that $3 billion is spent each year on electricity in the region.” This is a huge amount of money that the government spends for electricity. The prime minister of KRG also admits that there is electricity shortage. In fact, KRG could have promoted private sector to generate electricity in a perfect market competition, which could lead to less cost of it and sufficient electricity. Therefore, monopoly in the market would most probably be a big parasite to the economy of the

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