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Potato Chip Industry - Essay Example

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Potato Chip Industry and number July 20 2012 The industry players influence the market economy. The research delves into the potato chip’s monopoly industry. The research scrutinizes the monopolistically competitive, perfect competition and monopoly market economy…
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Potato Chip Industry
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Download file to see previous pages Often, there are barriers to the entry of new competitors, specifically potato chip products. The barriers include government laws that ensure one entity’s sole status in the current market segment. Often, the government offers a franchise the entity the right to exclusively operate in a new market economy (Miller, 2012, p. 533). There are several advantages in the 2008 potato chip monopoly environment. Wongs, the exclusive manufacturer of Wong potato chip products in the Northwest, has no competitors. Since there are no competitors, the seller, including Wonks, can dictate the price of the products. Wonks can price its products at ten percent above cost. Wonks can also increase its current potato chip products’ prices by 20 percent. Wonks can raise its prices in order to allocate funds for research and development of new potato chip –related products. The company can sell strawberry-flavored potato chip products. The company can sell vanilla-coated products. Wongs can sell the potato chip products in different sizes to fit the customer’s budget. Virgile Chassagnon emphasized “From the 1930s to present day, the industrial landscape has changed considerably. The modern firm has evolved in parallel with the rise of the competition, globalization and financialization that began in the early 1980s (2011, p.35).”Likewise, the current and future customers are at the mercy of the monopolistic entities, like Wonks. The clients cannot search for competitors to sell the same quality product at lower prices. However, Mizan Rahmann (2011) proposed the government must promote perfect competition. Perfect competition has more benefits compared to the monopoly market environment. For the government to benefit from the monopoly, Doyle observed “When governments intervene in markets truly open, competitive free markets do not exist. There are many examples of how competition is limited by the entry of new firms being blocked or in some way made more difficult (Doyle, 2005, p. 199).” The government intervention can be the best alternative to prevent entry of prohibited competitors. The government can set a limit to the number of competitors in any local industry. In addition, Deanna Malatesta (2011) reiterated the government can institute laws that control the abuses. Malatesta observed the government counters the credible threats of opportunists, franchise violators, in the monopoly economy with more effective laws. Further, the Vatican’s Pontifical Council for Justice and Peace council’s call for the establishment of a “world political authority” that is vested with the power to control both global financial transactions and the world’s economic activities, especially controlling the outright abuses of the monopoly organization’s unreasonably high prices. The council’s call answered the United Kingdom Prime Minister Tony Blair’s assessment that the current disadvantageous turmoil of the current European Union economy threatened both the military preparedness of the allies and their capacity to share humanitarian help to the poor and neglected members of the global society (Justice & Economics, 2011). The government benefits from monitoring and controlling only one potato industry entity, Wonks, by spending less monitoring time and costs. However, some other businesses will not benefit from the ...Download file to see next pagesRead More
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