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Antitrust practices and market power - Essay Example

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Google, the world’s largest search engine is an organization which has raised concern for antitrust violations, prompting the US Senate Antitrust Subcommittee to start an investigation over the possibilities of such violations (Newman, 2011). The main reason for the increased…
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Antitrust practices and market power
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Antitrust practices and market power

Download file to see previous pages... While the pecuniary costs associated with this Google antitrust behavior is price fixation and control for the search engine and website business prices, the non-pecuniary costs associated with the behavior include throwing other website companies out of business, or making them incur losses, which will in turn slow down the economic growth.
Monopoly structure entails the operation of a single seller in the market, while the oligopoly structure involves the presence of only few sellers in the market, which work in collusion for their economic benefit (Tucker, 2010). Both monopoly and oligopoly are achieved through effecting entry barriers for other business into the same market. The barriers can be natural barriers, such as high capitalization, infrastructure or specific resource requirement for entry to the market, which is only available to one or a few firms. Barriers can also be government barriers, where the government institutes some restrictions in form of legislation to prevent other businesses venturing into a certain industry, which is only designated for a particular operator (Tucker, 2010).
Oligopolies and monopolies are not always bad for the society. Even though oligopolies and monopolies allows just few firms to determine the quantities of products they avail to the market or fix prices they charge for such products, there are situations under which monopoly and oligopoly are beneficial to the society. Monopolies can allow a firm to take advantage of economies of scale by producing more commodities that lower the long run average costs, making it possible for the firm to offer low prices for its products (Tucker, 2010). The same case applies to firms operating under oligopoly, where it is only a few of them which are producing for the large market needs of the customers. This allows such firms to enjoy economies of scale, through producing in higher quantities, ...Download file to see next pagesRead More
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