Question

What are your thoughts regarding governmental control over monopolies? Should or should they not be allowed?

In competitive markets, we often face hyper-competition. What are some of the pros and cons of hyper-competitive markets v. those that face less competition?

Please answer with a detailed response.

Answer 1

The gov’t isn’t against monopoly, there are plenty of perfectly legal and socially acceptable monopolies. Even the gov’t itself is a monopoly, when it comes to printing cash (which is a very small part of the supply of money) or forming a military, for example.

Gov’t frowns on “conspiring to monopolize” an industry. Which means only that they don’t want monopolies to be created artificially (which may not serve the consumer well).

Naturally occurring monopolies, like we see in utilities, water and sewer systems, and other highly capital intensive industries are generally okay with gov’t and the people served by them.

The reasoning here, is that prices would have to be higher if there were competition. If there were ten wholly independent power firms serving you, each with enormously expensive generating capacities, transmission towers and the like, no one of them could charge you as little as a single one could.

It has to do mostly with very high fixed costs, or small consumer bases, in these cases of ‘natural’ monopoly.

Competitiveness does not derive so much from survival instinct - otherwise, everyone would be competitive, which is not true. I think it’s more nurture than nature, and not so much as competition, more so than wanting to win, or not wanting to lose.

For example, someone with multiple siblings would be more likely to be competitive than an only child. This reminds me of my crush in middle school. She was extremely competitive. She was the team captain and she quit the soccer team after they lost four games straight. My crush also had multiple siblings.

I am competitive as well, and I have two older siblings, both who have excelled in the academics, which drove me to be competitive in that field. Competitiveness is frequently associated with anger and ambition , and those who are hyper competitive seem to view winning as their only option. Most people who are competitive view winning as a way to increase their self worth, hence why they are competitive, to beat everyone else and be number one.

As for the pros and cons..

Pros: (Disclaimer: My personal opinion)

• You try harder to succeed.
• You have more ambition.
• You succeed much more often.
• You gain more confidence once you win.

Cons:

• Might be disliked by others for their intense competitiveness.
• Face negative moods when you don’t win.
• You’re too intense
• Have too much stress.