David Hernandez

Economics

Julio Alicea

5/16/17

Why a monopoly is bad for the economy

Monopolies harm the economy because they cost the economy jobs and raise

product prices. A Monopoly is a firm or a business that controls the entire production of

a product. Merging companies into a monopoly would lead to fewer jobs because they

would have no competition which would then lead to no innovation. Competition and

innovation are key parts of creating jobs and as stated by James M. Cole a deputy

attorney general in an article by the New York Times, The view that this administration

has is that through innovation and through competition, we create jobs. The less

companies there are the less jobs available and there is also no reason to innovate

when you are the only producer of a product. Prices would also rise due to monopolies

because monopolies are the only producers of the products they sell so they get to

charge what they want for them. The article from the New York Times also states that

the, Justice Department argued that the proposed deal, which would join the nations

second and fourth largest wireless phone carriers, would result in higher prices and give

consumers fewer innovative products. The Justice Department talks about the $39

billion merger between the cell phone companies AT&T and T-Mobile and how it would

increase prices and lower innovation if it happened. The higher prices would hurt the

economy because less people would be able to afford the products. If the history of
monopolies have taught us anything its that monopolies hurt our economy by costing

us jobs and raising prices because monopolies eliminate components that help avoid

these things from happening.

Why a monopoly is good for the economy

Monopolies provide benefits to the economy through efficiency. An example is

national grid with their electric utilities. As we talked about in class national grid is good

for the economy because it offers consistent delivery of a product. National Grid is the

only provider of a product that is needed so they are always in business. National Grid

is also a legal monopoly so the government makes sure that the prices are reasonable.

Monopolies are good for the economy when they are supervised its the power that

certain monopolies have that make it harmful.