The Existence of Monopolies in the Economy - Essay Example

Legal monopolies are those companies that operate exclusively in a market with no competition, offering goods at controlled prices. Indeed, governments pass legislations to legalize a monopoly with the initial intention to offer the best services to its citizens, although most of them do not live up to this expectation. On this platform, the existence of the U.S. Postal Service serves as the best example of a statutory monopoly.

            Indeed, the company has its roots in 1775, when its operation to deliver mail was started. The current legislations were, however, formalized in 1971, paving the way for the inclusion of its exclusive rights to operate as the mail carrier and custodian of all letterboxes in the United States. On this platform, it is important to note that the law recognizes USPS as the national agency for delivering mail, creating avenues that help the agency to thrive (Sidak, and Spulber 35). Although the law provides a thin line for the existence of other institutions like FedEx, they are required to charge higher prices and therefore leave the USPS without formidable competitors in the delivery of urgent mail and items.

            In addition, the USPS enjoys certain exclusive rights in the regulation of its services, most of which have been placed to discourage potential competition like private mailboxes. Further, the agency is exempted from any tax cuts, implying that innocent citizens through its lines of credit shoulder most of its operations.

            With the existence of the monopoly status, however, the citizens have enjoyed exclusive services, which are reliable and serve the whole country without discrimination or regional imbalance. With the backing of state resources, the USPS continues to serve the American population through the delivery of mail in convenient ways and at affordable prices to the average citizens.

            However, a closer analysis reveals the incompetent nature accompanying legal monopolies, mainly owing to the low-quality services that are associated with their activities. Critics have argued that the privatization of the institution would ensure that it provides better services to the citizens and that it increases its efficiency (Sidak, and Spulber 45). Indeed, there should be regulations to control the boundary of activities for the legal monopoly as the first step towards transparency and resolution of problems that have continued to face existing monopolies.

            An analysis of the main market reveals that the lack of competition has contributed to the deteriorating nature of the quality of services provided. (Feulner) contends that” Competition would bring down prices, and the post office would have to become more responsive to customers if it wanted to survive”.  Indeed, the monopoly has been able to set its rates to all the letters sent in the United States, often placing the minimum payment that can be made for postage, which influences even the decisions made by other smaller players in the industry like FedEx.

            The wastage of taxpayers’ money has been the subject of human rights activists, who argue that repeals in the legislation may increase the competence of the post office (Sidak, and Spulber 67). With better laws, other players will enter the market, and offer more efficient services at better prices that offer incentives to the customers. This, according to analysts may increase the efficiency of services offered by the postal office.