Effects of monopolies in the Usa economy Essay Example for Free

Effects of monopolies in the Usa economy Essay The concept of a monopoly is largely misunderstood and the mere mention of the term evokes lots of emotions that make clear judgment almost impossible. The standard economic and social case for or against monopolistic businesses is no longer straightforward. According to Mankiw (2009) a monopoly is defined as a market structure characterized by a single seller of a unique product with no close substitutes[1]. When a business dominates a market, it becomes a monopoly by virtue of its power. A company (or a group of affiliated companies) is considered to have a dominant position in a particular market if it exerts a decisive influence over the general conditions of trade in that market or can restrict access to that market for other businesses. Markets keep changing with the times and so are the conditions in which businesses must operate regardless of whether they have any noticeable market power. [2] Monopolies have contributed significantly in transforming the US economy to be the leading economy worldwide. This is largely due to the benefits arising from legal monopolies created by the Patent and copyrights law. Monopolies are in effect powerful tools of spurring economic growth in the US. How do monopolies arise? Two major conditions contribute to formation of a monopolistic trade environment. A product which has no close substitutes faces no competition thus its producer becomes a monopolist. Exclusive ownership of a key resource may lead to creation of a monopoly. A classical case is exemplified by the control of the computer hardware, market by International Business Machines (IBM) for nearly forty years. Due to its market dominance over the hardware, institutions that intended to initiate a project had to do so with IBM. (Rise in Monopolies, n. d. ) Monopolies also develop where there are barriers to market entry. These barriers are obstacles that make it difficult or impossible for any potential competitors to penetrate a particular market. Such barriers could either be natural or legal constraints that protect a firm from competitors. A natural monopoly arises when technology for producing a product enables one firm to meet the entire market demand at a lower price than two or more firms could. Legal monopolies develop in a market in which competition and entry are restricted by the concentration of ownership of a natural resource or by the granting of a public franchise, government license, patent, or copyright. When Microsoft licensed an operating system from Seattle Computer Company in 1981 their explosion into dominance began. Microsoft’s dominance over the operating systems enabled it to diversify into producing spreadsheets and word processors. These new software were made such that they worked best with its operating system hence tightening Microsoft’s grip of the market. (Mises,1981, p. 86). Certain circumstances do lead to creation of near monopolies or oligopolies. An oligopoly arises when a small number of firms have relatively large market shares. Though each firm is independent, interdependence may arise whereby one firm’s actions influence the profits of the other firms. In addition, when a small number of firms share a market, they can collude to increase their profits by forming a cartel and acting like a monopoly. Default monopolies may arise when there is lack of sufficient knowledge or interest on a particular subject[3]. A firm may end up being a small monopoly by having an upper hand when it comes to accessing knowledge on a particular trade. A case in point is the sole garbage collecting company in Taos. Are monopolies beneficial or detrimental to the US economy? Monopolies have been in existence throughout business history and several corporations have achieved complete dominance over a wide array of industries. The monopolies have been accused of charging exorbitant prices to earn super profits with little regard to consumer welfare . A fundamental question is; Are these business practices ethical? (Haas, 2006) Citizens of The United States value competition in their market system. Competition not only keeps prices low and encourages production of new products to the market place but also fosters innovations that help to bring down the cost of doing business. Contrary to popular belief, monopolies are not illegal in the United States . Indeed a government-created monopoly is exemplified by the patent and copyright law. This is a law that governs intellectual property. A pharmaceutical company that develops an original drug can patent it for several years during which it enjoys exclusive production rights. Such a patent offers the producer monopoly status where the producer can charge higher prices and earn greater profits. On the other hand, such a law is beneficial because it encourages innovation and continuous research within pharmaceutical companies to develop new and more superior products. Moreover only big monopolies with significant market power have the capacity to carry out research and development on their products. This leads to innovation since new knowledge is applied to the production process. The nearly twenty year monopoly enjoyed by Microsoft in manufacturing of its computer software has not only ensured harmony and uniformity in computer software but also facilitated accessibility of computers by the greater population. Consequently, this has lead to the information technology revolution characterized by easier access to information by US citizens and thus the US economy remains to be the world’s superpower. It is through such innovations that new channels of business for example e-commerce have sprung up . Citizens can now buy items and find good deals through iPods and other innovative devices arising from research and development by giant firms. From a different perspective, in the absence of real competition a monopolist may lack an incentive to invest in new ideas or consider consumer welfare. Monopolies may in certain instances offer inferior services or products. Amtrak enjoys a monopoly status in the passenger rail system. It has been criticized severally for failing to develop hybrid high-speed locomotives that save on energy consumption as well as failing to service some of its tracks that remain to be under- par conditions. Donald,D (1997) suggests that monopolization can be advantageous to the consumers by enabling cheaper production due to economies of scale. A monopolist may manage to maintain lower marginal costs due to economies of scale and the advantages of division of labor . Consequently; this translates into higher output at lower prices than would have been possible under competitive conditions. Such economies of scale also tend to guarantee uniform output and harmony in product characteristics. The benefits arising from economies of scale may be eroded due to X inefficiencies[4]. Monopolistic organizations cut on expenses that would have been wrought about by competition and by so doing they deny business opportunities to various support organizations like advertising and public relations firms. This has the net effect of creating unequal wealth distribution since vast wealth ends up in the hands of a few individuals. Another issue to ponder over is what to make of those monopolies that have come into existence simply by being better than all the rest. A case in point is the Wal-Mart stores which has been accused of running small shop-owners out of business in locations where it opened stores due to its retailing efficiency. Sometimes a market dominated by few firms/sellers does not always indicate the absence of competition, it can reflect the success of leading firms in providing better quality products, more efficiently, than their smaller rivals. Some monopolies throttle the creativity of enterprises and are a detriment in certain sectors. A classical example is the United States Postal Service that has continuously offered US citizens poor quality services at the expense of taxpayers. This sector needs to undergo restructuring in order to give market access to potential investors and thus improve on service delivery to the citizens. Inefficient production firms that enjoy monopoly status in essence fail to make optimal use of their scarce resources and in such circumstances, government intervention may be warranted through application of competition policy of market liberalization. A major preposition that makes monopoly undesirable is that monopoly leads to a failure in the market mechanism because the monopoly price is generally higher than both the marginal and average costs. This in turn results in the monopolist offering an exploitative price to the consumer since this price is above the cost of resources used to make the product. Such actions restrict free trade and consequently the consumers’ needs and wants are not properly satisfied because the product is being under-consumed. Some monopolies especially in the pharmaceutical industry have been criticized for monopolizing drugs for certain ailments like cancer and Aids though the patent laws. Such giant pharmaceutical companies have been accused of engaging in profiteering schemes at the detriment of the welfare of the American citizens. The higher average cost of production that may arise if there are inefficiencies in production also means that the firm is not making optimum use of its scarce resources. This may necessitate some form of government intervention for example by market liberalization in order scale down the monopoly dominance. Government created monopolies in sectors that require enormous capital outlays have ensured consumers have access to certain crucial services which would not have been possible were such ventures to be entrust solely to private investors. These state-run monopolies are service providers whose main motivation is not profit but to cater for the welfare of the citizens[5]. Their services are crucial in providing enabling environments for the citizens to explore and achieve their goals in life. Monopolies arising from merges and restructuring can operate more efficiently and thus provide better quality services to the citizens. The mergers eliminate several layers of bureaucracy and create efficient standardized processes. [6]However it is worth noting that some mergers may deprive consumers the benefit of choice. Conclusion Monopolies apparently exist because the quantity demanded in the market is completely satisfied by the monopoly (Peter 2003). The widespread view that the monopolist can fix prices at will is erroneous because the laws determining monopoly prices are the same as those which determine other prices. A monopolist can best serve its interests by separating consumers into classes based on their purchasing power. A company that controls all aspects of a field can ensure harmony and uniformity. Microsoft offers an outstanding example on this front whereby the greatest proportion of computers run on their software thus enhancing compatibility. Monopolies have resulted in great innovations and immense growth in several sectors of the economy while in others they have been detrimental for example through collapse of small enterprises or delivery of poor quality services. Monopolies are both beneficial and detrimental to the economy and a cost benefit analysis needs to be done to ascertain the role played by individual monopolies in any particular market. This demands a precise definition of what actually constitutes a market because in almost every industry, the market is highly segmented into different products. Globalization has made it very difficult to ascertain the real effects of monopoly power in any particular market more so due to the effects of the rapidly increasing competition. With proper regulation, monopolies have not only positively contributed towards economic progress but they also provided a stimulus for liberalization of major market segments. Liberalization in return has opened up many channels of investment and the net effect has been a great expansion in available business opportunities on a global scale. References Donald,D. (1997). Microeconomics: The Analysis of Prices and Markets . New York, Oxford University Press. Haas,W. (2009) Microeconomics : The Effects of Monopolies . Retrieved Nov. 17, 2009, from http://www. associatedcontent. com/article/85453/microeconomics_the_effect_of_monopolies_pg3_pg3. html? cat=3, Mankiw,N. G(2009). Principles of Microeconomics: South Western Cengage Learning Mises,V. L. (1981). Socialism: An Economic and Sociological Analysis Indianapolis: Liberty Fund. Peter,P. (2003)†Bullying the Monopoly Arflington VA: Security Management. .47, 12; Rise of monopolies. Retrieved Nov. 17, 2009, from http://cse. stanford. edu/class/cs201/projects-95-96/corporate-monopolies/development. html [1] This applies largely to pure monopoly where by the monopoly has total control over output and prices within a free and fair market with near perfect competition. [2] A common assumption is that a company is said to dominate a market if it controls over 65% of that market. As a rule of thumb, if a company gains control of 30 % of a market, it poses the risk of acquiring monopoly status but this depends on the size of other competitors in the market. [3] Default monopoly is in reference to a hypothesis advanced by Mankiw in an effort to explain how some non-convectional monopolies come into existence. [4] X inefficiency is a term first coined by Harvey Libenstein. It refers to the production losses incurred by monopolies arising from economies of scale and lack of incentives to be innovative. [5] The services of some of the state run monopolies are crucial in supporting the American citizens carry out their daily duties and thus their output in all spheres of their lives is thought to be enhanced by such ‘enabling environments’ [6] Mergers create more stable organizations that can guarantee continuous output of quality services and for an extended period of time unlike smaller companies that can be under constant threat by negative market threats.

Use of Metaphor in Tennessee Williams The Glass Menagerie Essay

Use of Metaphor in Tennessee Williams' The Glass Menagerie In The Glass Menagerie, by Tennessee Williams, the glass menagerie is a clear and powerful metaphor for each of the four characters, Tom, Laura, Amanda, and the Gentleman Caller. It represents their lives, personality, emotions, and other important characteristics. Laura is the owner and caretaker of the glass menagerie. In her own little fantasy world, playing with the glass animals is how she escapes from the real world in order to get away from the realities and hardships she endures. Though she is crippled only to a very slight degree physically, her mind is very disabled on an emotional level. Over time, she has become very fragile, much like the glass, which shatters easily, as one of the animals lost its horn; she can lose control of herself. Laura is very weak and open to attack, unable to defend herself from the truths of life. The glass menagerie is an unmistakable metaphor in representing Laura’s physical and mental states. Amanda is also well characterized by the glass menagerie. The glass sits in a case, open for display and inspection for all. Amanda try’s to portray herself as a loving mother, doing everything she can for her children, and caring nothing for herself, when in fact, she is quite selfish and demanding. Amanda claims that she devotes her life to her children, and that she would do anything for them, but is very suspicious of Tom’s activities, and continually pressures Tom, trying to force him in finding a gentleman caller for Laura, believing that Laura is lonely and needs a companion, perhaps to get married. Like the glass, her schemes are very transparent, and people can see straight through them to the other side, where ... ...Laura. If he had been what Amanda had wanted him to be, Laura would have become happy and so would have Amanda, and then Tom would have been able to go his own separate way, being freed of his duties to his mother and sister. However, as it turns out, the shelf seems to have broken, because the gentleman caller actually ignites the greatest fight of all between Tom and Amanda, and Laura is left shattered after she loses whatever she had left within her because the gentleman caller turned out to be a disappointment. Although the glass menagerie is meant as a direct metaphor for Laura, it also serves as a metaphor to the other characters in the play through various means. They are all interconnected in some way, depending on each other, and when things don’t turn out right, everything begins to fall into a downward spiral, with little or no hope for improvement.

The Effect Social Media Has on Anorexia

This Is the sickening effect that social media has on the generation today, that we should all weigh 90 pounds and be as thin as the fake body on a fashion magazine. Over half of girls and just about one third of males today go through this process every single day. They take steps that are not necessary to control their weight which Is most likely under the normal percentile for their age. These steps Include; laxatives, binging and purging, starving themselves, fasting or even smoking to control their weight.Larger weight and over weight teens or even children are more keel to engage in this horrible behavior only to fit in with the girls or boys on the magazine. In fact, over 20% of these overweight girls and Just over 6% of overweight boys have confessed to using tactics like starving or binging and purging to control their weight. (MEDIC) It is not hard to get sucked into this way of thinking, all it takes are a few articles and covers on a popular magazine and then the image of who you should be, according to the magazine, is burned In the back of your head forever.This train of thought Is not Just put In your brain after a day, no It takes timely The cost alarming thought of anorexia is that it is not only found in teenagers or adults, it is starting to be found in children as little as five years of age. If a Barbie is what is thought of as a role model to a young teenage girl is that not social media affecting the way their brain Is trained to picture perfection? A Victorians Secret model effects the way a mother think about herself greatly so when they start to diet, their young daughter starts to see this as normal and is trained to think that this is what said daughter should be doing.Social media is effecting mothers, aunts, or even sisters which Is then effecting young children. (Eating Disorders) In a study done of five year old girls it was revealed that very significant portion of the very young children associated a healthy diet with food rest riction, thinness, and extreme weight loss. If this is what is being instilled in our young people today then what will the future of our world look like? (Anorexia Begins) One of the most important and influential ideas that social media affects is a teenage girls perception of how skinny is beautiful.Every magazine, television commercial, and website is constantly showing how beautiful you should be and how o make sure that the extra two pounds on your hips can disappear In Just two weeks! There Is the rare moment when any ad is showing that you are beautiful just the way you are and you do not need to weigh 100 pounds to truly radiate beauty. Social 1 OFF 120 pounds because if you weigh more than that in this society then you are truly fat. What social media is not telling you is that many teens have admitted that they use unhealthy tactics because of popular media shown in every aspect of social feeds.What it also does not tell you is that around a thousand women die each year c ause of unrealistic expectations that magazines set for us. They die trying to reach perfection without realizing that perfection is far behind them. (Teen Anorexia) Perfection is all in our heads and the image is put in our heads by people on the covers of magazines, what is not realized is that all of it is fake. All models in social media are a sample size of 0-4 but on the cover of anything they are made and when teenage girls look at the they believe that this is the normalcy and desirability that they should be faced with.With this they pressure their peers which does not stop tit other girls, but has spread to pressuring boys. All girls put pressure on guys to look a certain way like an Firebombed and Fitch model, this has driven over 10% of guys to fall into anorexia, or bulimia and in extreme cases steroids to fit the bill for most women. (Male Eating Disorders) Males are over half as likely to suffer in silence because they do not think that this illness is normal for men to have. ANDREA: Eating Disorders) Eating disorders are should not normal, in males or in females, and if there are signs and symptoms of any sort of eating disorder help should try and be established. Unfortunately though in our society they are more normal than actually looking normal! Everyone is wonderful in their own way, Psalm 139:14 states, â€Å"l praise you because I am fearfully and wonderfully made; your works are wonderful, and I know that full well. † (Hope, and Healing) But is it known in society that everything is wonderful?Certainly not with social media telling people that a double zero is true beauty. Why is it the the Bible cannot be our source of social media, it gives countless examples that beauty is given by God, that perfection is the person he made and it would not be starved and withered down to 90 pounds because that is the way that the world thinks it should be. God makes every inch of every body perfectly in his eyes, it is not imperfect to weigh 130 pounds, or imperfect to not have the smallest thighs and the tiniest waist.What society needs to realize as a whole is that our imperfections are what makes up who they are. So the girl looks back in the mirror and again drops her eyes to the magazine now wrinkled in her hands. She traces the figure with her fingers re-reading the words on the cover over and over in her head. â€Å"Drop two pounds in two days! † â€Å"Perfection in he form of this super cute new tank top† â€Å"Be a size zero in zero days! † Then with only a moments notice, she swiftly but not violently tosses the magazine into the trash.She will not fall into the trap that the media has created so sneakily but will be herself. She is not going to criticize her body, or will it to be something it is not. And she continues on her life living it our as a normal teenager, without being negatively affected by the social media that surrounds her. And ever so quietly her mind has been made up; not hing is going to change who she is, because she likes the image that is reflected in the mirror.

Accounting Theory and Practice Essay - 2225 Words

| | 1. Introduction Recent years have saw that listed firms, especially the large organisations, voluntarily disclose their Social and Environmental issues in their annual reports. As a result, a question was come up with by researchers: why managers would choose to undertake the voluntary activities? Although there is no consensus being reached about what perspective theories should be used to explain the Social and Environmental Accounting, and moreover critique voices are from the works of Marx or by the deep-green or feminist literatures (Deegan, 2002), to some extent, systems-oriented theory and Positive Accounting Theory can list some hints. This†¦show more content†¦Ã¢â‚¬Å"The reputation risk management perspective on voluntary social and environmental disclosures in annual reports assumes that threats to corporate legitimacy can result in damage to the value of a company’s reputation, and such risks to reputation need to be minimized through active management.† (Deegan Unerman, 2006) As said by Jonathan Symonds, the Chief Financial Officer of AstraZeneca’s Risk Advisory Group, Failure to deliver our core value could seriously impact out reputation. While the core value is something like social responsibility, environmental policy, and so on, it is those that company should communicate with the public to protect their reputation as legitimate. For example, after the Brent Spar oil rig dumping, Royal Dutch/Shell voluntarily prepared reports about its people and profits in order to repair its image for its failure to deal with the execution by the Nigerian government of an anti-Shell activist (Livesey Kearins, 2002). 3. Stakeholder theory As both legitimacy theory and stakeholder theory belong to â€Å"political economy theory†, they have some overlaps (Gray, Kouhy, and Lavers, 1995). However, compared with legitimacy theory, which mainly discusses the social expectation, stakeholder theory presents a closer view with particular groups in society. 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