The literal definition of a monopoly is “the exclusive and complete ownership and control of products and services.” That includes through legal means. However, monopolies also are used to describe an entity that has near-total control or a vastly large percentage of that market. Monopolies are an extreme result of free-market capitalism without restraints. After many years of doing business, a single company outperforms and becomes large enough to dominate its competition. Join Philip Michael and Tal Heinrich on Bold TV as they talk about monopolies and their impact on society.
Results of a monopoly
Like the game, real monopolies are supposed to dominate and win the competition. Unfortunately in this game, the consumer does not get to collect $200 when they pass go. With a lack of competition, these companies are able to produce cheap products and name their price for that product or service. Consumers have to comply with these unfair prices because there is no other option. You want competition because it gives an incentive to bring prices down for the consumer.
Today’s different types of monopolies
There are many different companies today that might not be considered monopolies outright, but they dominate their industry. Some are more known than others, and some are even disguised to look like competition. Less-known industries that lack competition are airlines, automobiles and eyeglasses.
- There are few major airlines that control a large portion of the U.S. market, which include American, Delta, Southwest and United Airlines. These Airlines make up 66% of the domestic market share.
- In the automobile industry, there are many automobiles that are, in reality, owned by another car company. The largest of them all is Volkswagen. The German automobile manufacturer comprises 11 different car companies, which are Audi, SEAT, ŠKODA, Bentley, Bugatti, Lamborghini, Porsche, Ducati, Scania and MAN.
- Many well-known glasses, such as Rayban and Oakley actually are owned by a company that many people never heard of, Luxottica. Luxottica owns 12 retail stores and 33 eyewear brands.
These industries are just a few of the many companies that have monopolized their sector of the market. The only way to fix the issue of monopolies is to introduce more competition. However, it’s very difficult to compete with already established companies.