Are monopolies always unfair and inefficient

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1. Introduction

With the ever-accelerated updating of science and technology， the free competition advocated and implemented in capitalist economy makes the production of some realms gradually become concentrated， which leads to a particular market form called “monopoly” （Lowe， 1987）. Monopoly is usually regarded as a kind of behavior that is in order to eliminate or restrict all existing and possible competitions from other companies. Over the years， the monopoly has been insistently seen as a major factor hindering the development of capitalist economy considered by the public. Faced with the needs of stopping the monopolistic behavior， numerous countries introduced anti-monopoly law to promote the healthy development of the market economy.

However， “monopoly” is a neuter， and it is still controversial about whether monopolies are really as heinous as people imagined. Lowe （1987） claims that there are both negative and positive effects of the monopoly on the advancement of the socioeconomics among the western economists for many years. This essay will address the following question： “Are monopolies always unfair and inefficient？” In order to answer this question， I will first clarify the passive effect of monopolies， and then elaborate the positive functions of the monopolies. Basically， I will argue that everything has its characteristics of unity of opposites， monopoly is no exception. In certain contexts， monopoly can also be an indispensable part in promoting economic development.

2.1 Defects of monopolies： Barrier to regular competitions

Monopoly has some characteristics that are detrimental to the healthy development of the economy. Firstly is efficiency. It is believed that due to the absence of pressure brought by the competitors in the competitive market， monopoly enterprises often lack the initiative to improve the efficiency. The output of the experimental industries could increase if eliminating the monopoly arrangement in that industry. Therefore， monopoly is less effective and can form a barrier that stop poor countries from being rich. Furthermore， under the condition of monopoly， most resources often cannot be effectively used. Additionally， the monopoly degree of enterprises is proportional to the unemployment rate and in inverse proportion to the output level.

The next is about the welfare loss. The loss of social welfare accounts for approximately 6% of the national income. The welfare loss of large enterprises in the United States accounts for nearly 13% of the company's gross domestic product. Although some of these losses have been exaggerated because a large portion of the wealth has just transferred from consumers to producers， the whole society has paid a certain degree of price after the formation of a monopoly.

3. Conclusion

The law of the unity of opposites is a fundamental law of the universe， so as monopolies. Sometimes monopoly enterprises seek profits greedily， but it will be difficult for them to become bigger and stronger if there is no such pursuit. Furthermore， monopolies indeed have their specific and irreplaceable advantages in the production and supply of numerous products. Therefore， monopolies are definitely not always unfair and inefficient. For the important industry related to the national economy and people's livelihood， state monopoly is very necessary because of their benefits to the stability of society and harmlessness to consumers. For some emerging industries that are pursuing internationally， monopoly profits of one stage should be allowed and tolerated. In conclusion， in the process of economic development， we should both foster the strengths and circumvent the weakness of monopolies in order to maintain the vitality and endurance of the economy.

Reference List：

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