Question

We talked quite a bit about textbook monopoly theory and its potential weaknesses. Why does the theory appear to be inapplicable (that is, why doesn’t there seem to be much evidence in the real world)?

Answer 1

In the present world, we have seen that there are very few monopoly companies and they are mainly owned by the government. Other wise the trend of monopoly is falling these days. This is mainly because of the entry of private firms in various industries. As the entry of private firms is increasing with the growing level of liberalization in the economy, the monopoly structure of the market is falling which also creates inefficiency in the markets. On the other hand, another reason could be increase in openness of the economies As the level of international trade among the economies is increasing competition among the firms is increasing and there is no such product in the market which does not have a close substitute and these are the reasons that monopoly does not seem to be much evident in the real world.