Question: Describe an example of a private firm with established or rapidly emer

Question

Question: Describe an example of a private firm with established or rapidly emerging monopoly power? Why do you think it is a monopoly? What, if anything, do you think limits this particular firm's monopoly power? How did the firm obtain its monopoly power? From the perspective of society as a whole, do you think this particular firm's monopoly power is a good thing or a bad thing? Why or why not? Please use an example of a monopoly that has not been created by government actions or policies. For example, public utilities and the telephone companies are beyond the scope of this discussion question.

Focus: Use contemporary examples to illustrate some of the strategies that firms can use to obtain monopoly power, some of the factors that limit the ability of firms to exercise monopoly power, and some of the pros and cons of monopoly power from a societal perspective.

Explanation / Answer

In this contemporary era , it is highly impossible to get a perfect monopoly but the company which imitate is the most is De Beer, the diamond company. A company which controls the price of diamond. Over the time, the monopoly power of De Beer has decreased but not lost. This is because of the high coverage of south Africa which have diamond mines.

The only thing that is limiting its monopoly power is the growing competition. Though De Beer still has the major market share, it is losing its market power slowing due to increasing competition.

The company obtained its monopoly power due to the endowment of Diamond resource. Diamond is limited and huge mines are under this company, which has helped the company to maintain this power.

The strategy used by this company while marketing themselves was very unique. They tried to market diamond and not the company. “Diamond is Forever” is a tagline that was used by the company. They knew it that marketing diamond will directly improve their sales as they are the major share holder in the market.

Competition is something which always improve the efficiency as it brings the concept of improvement. Monopoly usually maintain status quo and the R&D diminishes as they are the one ones in the market but when there is competition, the scope of improvement is there. Such healthy competition is important for fair pricing and improving market.

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