Question

What barrier to entry have the following companies exploited to maintain market share? (hint: use Google.) a. DeBeers had a majority market share over the diamond engagement ring market for 1. many decades. Amazon continues to get bigger and bigger and capture more of the retail market. Why does the USPS handle mail delivery in the US, despite glaring inefficiencies? b. c.

Answer 1

1.

A

It is the ownership of natural resources that acts as a source of monopoly by the DeBeers company. The company has control over most of the ores that produce diamonds, leading to a monopoly in the market.

B.

It is the economy of scale, huge initial investments  and natural monopoly that is created by the Amazon that leads the company to become bigger with time. It creates monopoly like market power.

C.

It is a legal monopoly, enjoyed by the USPS, that led to the delivery of mail delivery services, even if the operation is inefficient. It is the law that makes only USPS to be able to deliver letters and the use of the mailbox. Hence, USPS delivers the service with legal and government protected monopoly.