The Universal Electronics case had a critical barrier.
A patent gives a producer 20 years of exclusive rights to produce a product.
Kodak and other potential rivals were kept out of the market for instant development cameras by the Polaroid Corporation.
The government creates and maintains monopolies by giving a single firm the exclusive right to supply a particular good or service, even though other firms can produce it.
Telephone companies and cable TV stations are examples.
The U.S. and baseball teams have monopoly privileges.
The bookstore on the campus may have exclusive rights to sell textbooks.
It is possible for a company to lock out competition.
In order to compete, airlines need landing rights and terminal gates.
Oil and gas producers need transportation.
Consumers need electricity.
The features of computer operating systems are important to the software vendors.
Potential competition can be locked out if a single company controls critical inputs.
That is said to be a prime source of Microsoft's monopoly power.
If competitors surmount other entry barriers, they may be sued out of existence.
Start-up firms are usually poor in cash and rich in ideas.
They need to get their products to the market quickly to make money.
Critical management, cash, and time can be taken away by a timely lawsuit.
Before the merits of the lawsuit are decided, the company may be forced to withdraw from the market.
A monopolist may purchase a potential competitor when all else fails.
The cartoon suggests that mergers raise consumer prices.
Competition in an industry is reduced by mergers and acquisitions.
Increased industry concentration could lead to higher prices.
Economies of scale may allow a monopoly to persist.
Smaller firms may not be able to compete if they have a large cost advantage.
We look at the barrier again.
It's possible that monopolies could benefit society despite the strong case against market power.
There is an argument to be made that monopolies have greater ability to pursue research and development.
There is an argument that market power creates an incentive for invention and innovation.
The third argument in defense of monopoly is that large companies are more efficient than smaller firms.
The firms are protected from the constant pressure of competition.
The manager of a firm that is perfectly competitive has less to worry about.
She can't afford to purchase a longer view for research and development because she can't see it.
Monopolists have a clear financial advantage in pursuing research and development activities, but there is no incentive to do so.
Research and development is not required for profitable survival.
Research and development that makes existing plant and equipment technologically obsolete is counter to a monopolist's vested interest.
A perfectly competitive firm can't continue to make significant profits unless it stays ahead of the competition.
There is a significant incentive to discover new products or new and cheaper ways of producing existing products.
Is a company liable if it keeps through fluorescent lights that use 70 percent less energy.
The two said they sold Universal the technology, which was called a solid unusual ruling by a California jury.
A jury in Oakland ordered a unit to be aggressive.
Universal suppressed the technology that allowed Magnetek Inc. to pay $25.8 million to two California companies.
The unit had to protect its less efficient models.
Mr. Alling said that they failed to bring the pair's energy-saving fluorescent-light tech to us, yet nology to market in a profitable manner, suppressing it in favor they planned otherwise.
The lawsuit is similar to the legends of big business quashing inventions that threaten its interests.
Universal Manufacturing Corp., now a DOW JONES & COMPANY, Inc., buried a technology clearance center in the format Textbook via Copyright unit of Los Angeles-based Magnetek.
There is little incentive for a monopoly to pursue R&D.
R&D that threatens established products may be suppressed.
A novel incentive argument is used in the second defense of market power.
It's argued that greater profit prizes will encourage more entrepreneurial activity.
If they can dream of one day owning a monopoly, little Horatio Algers will work harder and longer.
The market power argument is not convincing.
An innovator can make a lot of money in a competitive market.
Even though profit margins were later squeezed, the early birds got the worm in the competitive computer industry.
The profit incentives available in a competitive industry are not bad.
There are arguments about research and development efforts.
A monopolist doesn't have much incentive to pursue R&D.
Entrepreneurs may be deterred from pursuing product innovation or technological improvements if they can't penetrate a market that is dominated.
The barriers to entry that surround market power can keep out potential competitors and lock out promising ideas.
A third defense of market power is convincing.
A large firm can pro duce goods at a lower cost than a small firm.
The Universal Electronics monopoly was the subject of a story.
Universal confronted the same production costs as the competitive industry.
Each firm was converted into a separate plant owned and operated by Universal.
We were only concerned with the different production decisions made by competitive and monopolistic firms, and Universal wasn't able to produce computers any more cheaply than the competitive counterpart.
It might be possible to eliminate duplicative efforts by centralizing functions.
It could shut down some plants and concentrate production in fewer facilities.
A monopoly would offer attractive resource savings.
There is no guarantee of such economies of scale.
Some firms and industries are subject to economies of scale.
There is no guarantee that consumers will benefit from economies of scale.
The merger of the nation's only two satellite radio companies was opposed by the Justice Department.
The Justice Department concluded that even a little competition was better than a monopoly in the long run, even though there were substantial short-run topics such as economies of scale in eliminating duplicate facilities.
One firm can produce economies of scale over the entire market supply more efficiently than any other firm.
The one large producer has a decided advantage over would-be rivals.
Natural monopoly is typified by local telephone and utility services.
The market can be supplied more efficiently by a single company.
Natural monopolies may be abused.
Moffett says so.
February 20, 2007.
Permission was granted for this article to be reproduced.
economies of scale may be enjoyed by monopolies.
Consumers may benefit from competitive pressures to reduce costs, improve product quality, and lower prices in the long run.
Multiplex movie theaters achieve economies of scale by sharing operating and concession facilities among as many as 30 screens.
When costs go down, megamultiplex theaters don't have to reduce prices.
The benefits of increased efficiency may need to be shared with consumers.
Governmental regulators aren't the only force keeping monopolists in line.
Potential rivals may be watching how well the monopoly does.
Rivals may enter the industry if it does well.
Would-be competitors are locked out of the market if entry barriers are too high.
When the lure of monopoly profits is irresistible, entry barriers will be surmounted.
Both domestic and foreign companies decided to enter CNN's monopoly market when its profits reached irresistible proportions.
CNN has been unprofitable since then.
The whole case against monopoly is wrong.
If potential rivals force a monopolist to behave like a competitive firm, then monopoly imposes no cost on consumers or society at large.
The Ford Motor Company had a monopoly on mass-produced cars at the time Henry Ford decided to increase the price of the Model T and paint them all black.
Potential rivals saw the profitability of offering additional colors and features, such as a self-starter and left-hand drive.
Ford's market power was reduced when rivals began producing cars in volume.
The Ford Motor Company tried to regain its dominance by giving cars in colors other than black.
A growing crowd of media giants want other companies to have the same ideas.
The majority of people at General Electric don't get their news from Cable News Network.
Turner Broadcasting Sys plan for launching its own national news network with a strong unit with a host of rival 24-hour news networks spurred local component.
Last year, with the market to itself, CNN and its related news British BSkyB service already offers a 24-hour news channel, businesses, including a Headline News channel, generated said last week that he wants to launch a U.S. competitor to about $227 million in operating
CNN may not keep its monopoly for long because of a straightforward economic behind all the expansion plans.
If the pro calculation is correct, companies already in the news business think they can overcome huge distribution hurdles caused can squeeze out more profits with relatively little new cost by lack of space on crowded cable systems, their strong brand expanding to 24 hours of TV news.
In 1997 Copyright will launch a 24 hour news service in the U.S.
If a monopolist's profits grow, would-be competitors will try to overcome barriers to entry.
The market may be contestable if entry is possible.
The Model T ceased to be produced by Ford in 1927.
Competition can force a monopoly to change its ways according to the experience with the Model T. There will always be a gap between the two outcomes.
It can cost consumers a lot.
All Model Ts were black from 1913 to 1926.
After 1927, when the Ford Motor Company could no longer act like a monopolist, it still didn't price its cars at marginal cost.
T H E E C O N O M Y T O M O R R O W Ford Motor Company's experience shows that monopolies rarely last forever.
Potential competitors will always look for ways to make money.
Eventually they'll develop substitute goods that replace monopolist's products.
Consumer advocates say we shouldn't have to wait for the invisible hand to dismantle a monopoly.
They want the government to force the monopoly to change its behavior.
Consumers would get better products and lower prices sooner.
A federal judge yesterday found Microsoft guilty of violating antitrust law by trying to crush the competitive threat posed by the Internet.
Excerpted with permission.
A federal court concluded that Microsoft followed the textbook script of monopoly, charging high prices, and suppressing innovation.
Windows powers 9 out of 10 personal computers.
It has a large share of applications software.
Critics fear that monopoly power is a threat to consumers.
Microsoft charges too much for its systems software, suppresses substitute technologies, and pushes potential competitors around.
Microsoft is a bully.
This argument was accepted by a federal court in 2000.
The court considered forcing changes in Microsoft's structure and behavior to weaken the company's hold on the computer market.
The federal government's authority to mend Microsoft's ways comes from the Sherman, the Clayton, and the Federal Trade Commission Acts.
In 1984 the government used this authority to dismantle the American Telephone and Telegraph's phone monopoly.
AT&T supplied 96 percent of long-distance service and 80 percent of local telephone service.
AT&T kept long-distance charges high and compelled consumers to purchase hardware from its own subsidiary.
If the government ended the AT&T monopoly, potential competitors said they could provide better and cheaper services.
After 4 years of antitrust litigation, AT&T agreed to separate its long-distance and local services and turn over the local transmission networks to new "Baby Bell" companies.
There has been a revolution in telephone hardware, services, and pricing since then.
The antitrust action against Microsoft was filed by the U.S. Department of Justice.
The first accusation against Microsoft was that it put entry barriers in the way of competitors in operating systems.
Mergers, contracts, antitrust responsibilities of the federal government created or acquisitions that threaten to monopolize an industry are some of the increased spiracies in restraint of trade.
Firms are subject to fines if they violate the Sherman Act.
Consumers who were damaged in 1914.
The U.S. Department of implementation issues are unanswered because of the act's basis for government antitrust activity.
There are barriers to entry and the Sherman Act.
These kinds of questions determine how and when the anti ton Act will be enforced.
Three landmark antitrust laws contain the legal foundations for antitrust intervention.
Consumers were forced to accept Microsoft applications along with the operating system because it did not reveal operating features that make applications run more efficiently.
Consumers don't have much incentive to buy a competing product when the latter occurs.
Rival product icons were not allowed on the Windows desktop by Microsoft.
Microsoft was accused of buying out promising rivals.
The government's charges were laughed at by Bill Gates.
Microsoft dominates the computer industry because it continues to produce the best products at attractive prices, according to him.
He argues that Microsoft doesn't need to lock out potential competitors because it can and does beat the competition with superior products.
Even though Microsoft supplies most of the industry's output, it has to behave like a competitive firm.
Microsoft is not a bully.
The government should let the market decide who best serves consumers.
A federal court determined that Microsoft was more of a bully than a genius after 9 years of litigation.
The court concluded that Microsoft had abused its position in operating systems and held a monopoly.
Consumers were harmed.
Consumers were denied better and cheaper information technology by Microsoft.
The European Commission slammed with its media player stripped out.
Microsoft was fined $357 million for not complying with a 2004 antitrust remedy that called for it to supply useful Windows server ruling.
Technical can easily absorb the fine if Microsoft misses a Dec 15 deadline.
Microsoft paid a record $613 million fine and obeyed an order to supply Europe with a version of Windows.
Permission was granted for this article to be reproduced.
EU regulators want to lower entry barriers for firms that want to compete for software applications.
The trial judge suggested that Microsoft should be broken into two companies, an operating software company and an applications software company.
The Justice Department only required Microsoft to lower entry barriers for competing software applications when Windows XP was about to be launched.
Rivals complained that they didn't have a fair chance of competing against the Microsoft monopoly despite Microsoft agreeing to change its conduct.
Huge fines were imposed on Microsoft in 2004 and 2006 by European regulators.
Market power is the ability to change prices.
Goods and services will be sold at a reduced rate.
In a situation in which only one firm produces sloping market demand curve, the extreme case of market power at higher prices.
The competitive industry is the distinguishing feature of any firm with market power because of its ability to equate the demand curve it faces with downward sloping.
In the case of monopoly, a competitive industry ends up equating marginal and the market demand curve are the same.
There is a downward-sloping demand curve.
The monopoly's higher profits will price.
Barriers to entry are needed in order to sell larger quantities of output.
Other firms can't expand market supplies if a firm doesn't have market power.
One of the barriers to entry is patents.
The defense of market power is based on the rate of output at which marginal revenue is less than marginal ity of large firms.
The economies of scale weaken the first two arguments.
Large firms aren't necessarily more that competitive firms are under more pressure to efficient because either constant returns to scale innovate and can stay ahead of the profit game only if they or diseconomies of scale may prevail.
The acquisition and abuse of monopoly exploitation is restrained by antitrust laws.
When one firm can produce the mountable, market forces may ultimately overcome a output of the entire industry more efficiently than can a monopoly as well.
The game of Monopoly has an objective to get all 5.
What would have happened to the iPod prices and the property?
Monopolists don't try to establish the highest 7.
Consumers might benefit from a merger.
The court had to find out if Microsoft is a perfectly award Polaroid compensation.
There are numerical and graphing problems in the Student Problem Set at the back of the book.