Essay On Monopolies
Peter Thiel’s argument that monopolies are beneficial to the society in the same way they are to the people who run them is wrong. The PayPal founder provokes this thought in his book “Zero to One” but I personally disagree with his point of view. He claims that “competition is for losers,” and even though his argument might seem legitimate as he is a well known businessman, it is not true that all competing businesses are guaranteed of losing. Only the businesses that are not good enough to compete with other firms lose. Monopolies are harmful not just to consumers, but also to society as they eliminate variety through market domination.
Consequences of Monopolistic Power to The Economy
Regarding the general economics, …show more content…
It is right to say that due to its dominant position, a monopoly is best placed to bear the risks that are associated with innovation. However, few monopolies take advantage of this factor since they have no competitors. In a competitive environment, as opposed to a monopolistic one, innovation is a necessity and not an option, whether a company can fund research or not. As long as the customers may highly demand the goods and services sold by a monopoly, the organization may show little incentive for improvement or innovation. Therefore, Thiel is not entirely right by saying, “monopolies can keep innovating since huge profit margins enable them to develop long-term plans” (Thiel and Blake 28). Thus, in as much as a monopoly has funds to finance innovation, most of them find innovation less compelling due to lack of competition.
Monopolies in Cable TV As a Case Proof of Harm Caused by Monopolies
In the U.S, an individual cable TV service provider serves several regions, communities, and cities, and even though there is competition in the industry on a national level, the cable providers are monopolies in the local and regional areas they