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The Big, The Bad, and the Monopoly - Essay Example

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Business comes on all sizes, all market shares, and all variations of horizontal and vertical markets of branding. While Archer Daniels Midland (ADM) has been successful at acquiring profit centers that relate to food products in its 80 year history, Berkshire Hathaway has been more diverse in its holdings…
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The Big, The Bad, and the Monopoly
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Download file to see previous pages In the ADM case, its size may have been to the detriment of the consumer and taxpayer, while Berkshire may have been an innovator that saved jobs and created economic opportunity. The motives behind the move toward large-scale corporate entities may be suspect, but big business is not the fault. In fact, big business can be a boon and is essential in promoting a healthier economy in today's global marketplace.
Without big business, the world economy could not operate. Take the case of Intel and the development of the microprocessor. Certainly Intel dominated the market for years and has continued to do so. However, the product could not have been developed and manufactured by several smaller companies with the same expertise and cost factor that was available to Intel. Microsoft operating systems and PC manufacturers were quick to limit their source of goods and self promoted a product that consumers demanded. As the decades passed, consumers were treated to greater computing power and greatly reduced cost. Along with these benefits came the necessity of standardization.
Though it seems the threat of monopoly existed, the results indicate otherwise. In the end, manufacturers were dedicated to selling products and not exploiting the marketplace. As Carson, Thomas, and Hecht contend, "Few can deny that product progress and relatively falling prices for most consumer and goods [...] have resulted only from the great capital concentration and large scale marketing strategies of big enterprise" (96). Few consumers would be happy to return to the early days of computing with its multiple operating systems, non-standardization, and inability to transport data across operating system formats. The concentrated big business effort has made the US computing industry one of the world's dominant industries.
The downside of big business shows its force when price and production rates are regulated such that profits are maximized at the cost to the consumer. This, in reality, rarely occurs. The OPEC cartel was an attempt to stem production and raise prices based on a shortage of supply in the 1970s. However, market forces have a way of dealing with monopolistic actions. The North Sea began production and the Soviet Union peaked at 12 million barrels per day making it, a non-OPEC member, the world's top producer ("Supply"). The high price also made new technologies feasible that would have not been economical at the lower prices. These forces combined to increase supply and ultimately reduce prices.
Cutthroat competition is often viewed as a predatory and monopolistic practice. Larger firms, with more capital, may undersell their competition at a loss in an effort to run them out of the marketplace. However, depending on the situation, it is often the smaller and more flexible companies that are able to compete in this environment. "[...] the smaller, more mobile firm, not burdened with heavy investments, that is able to "cut its costs" [...] and outcompete the larger firm. In such cases, of course, there is no monopoly-price problem whatever" (Rothbard).
The government has the power to limit monopolistic practices, though tends to express its power at the political whim of the administration currently holding office (Carson, Thomas, and Hecht, 97). Add to this the factor that there are several government-protected monopolies in existence. The postal service may be ...Download file to see next pagesRead More
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