Glamor Economics

Chapter 68

Chapter 10 Section 2 The only buyer, the temptation of the top spot - Monopoly

There is a joke circulating on the Internet:
A certain leader lived in a guest house in the town. After a rough day, he wanted to take a hot bath in the bathhouse.

The leader came to the entrance of the bathhouse and was stopped by a waiter: "Sir, if you want to take a bath, please pay 15 yuan for the initial installation fee. We will install a shower head for you."

After the leader paid the money, he just wanted to go in but was stopped by the waiter: "Sir, I'm sorry, for the convenience of management, each of our nozzles has a number. Please pay 10 yuan for the number selection fee. The selected number is only for you. Use by one person."

The leader was a little angry, but he paid the money and chose No. 8.The waiter said again: "You chose an auspicious number, and you have to pay a special surcharge of 8 yuan according to the regulations." The leader suppressed the fire and said, "Then I will change it to number 4. This is not an auspicious number. Always use You don’t need to pay any special surcharges, do you?”

The waiter said: "No. 4 is an ordinary number. Of course, there is no special surcharge, but you have to pay a fee of 5 yuan for changing the number." Did you take a shower?"

The waiter smiled and said, "Of course, please." The leader glared at him and walked in.The waiter suddenly added: "I'm sorry, I have to tell you: since No. 4 nozzle is only for your use, so no matter whether you come to take a bath or not, you still have to pay a monthly rent of 7 yuan and 5 cents. In addition, you A shower is charged at 30 yuan per 6 minutes. The monthly payment is before the 20th, and if you fail to pay after the due date, you will have to pay a certain late fee..."

"Enough, enough, I won't wash it!" The leader was furious, turned his head and left.

"Aren't you really going to wash it?" The waiter smiled and said, "If you don't use the No. 4 nozzle anymore, then you have to pay a sales fee of 9 yuan and 8 cents. Only in this way will you not have to pay us anything in the future. fee."

The leader was really angry and quarreled with the waiter.After a while, the manager arrived, and after learning about the situation, he smiled and said to the leader: "Sir, I'm sorry, maybe you don't know that the bathing industry is a monopoly here. Fortunately, you didn't soak the pool, otherwise you would have to pay for it." What about your 'roaming' charges?"

Monopoly means "sole seller," and it refers to a special situation in an economy in which one firm controls the market for a certain product.For example, if there is only one water company in a city, and it can prevent other competitors from entering its sphere of influence, this is called a complete monopoly.

Since the entire industry is alone and there is no semicolon, it is obvious that this monopoly can become the price decider, and is no longer swayed by the price.What is certain is that the price of goods in a completely monopolized market will be much higher than that in a perfectly competitive market, so that a monopoly firm can obtain monopoly profits that exceed normal profits. Since other firms cannot join the industry to compete, this monopoly Profits will be there for a long time.

It is not easy to break the monopoly.Usually, a complete monopoly market has three guard "bunkers". One is that monopoly enterprises have economies of scale advantages.That is to say, under the condition that the level of production technology remains unchanged, the reason why monopoly enterprises can defeat other enterprises depends on the advantages of large production scale, high output, and thus low total average cost.The second is that monopolies control certain resources.The Coca-Cola Company of the United States has long dominated the world by controlling the ingredients for making the drink. South Africa's Derby Company has also formed a monopoly because it controls about 85% of the world's diamond supply.The third is that monopoly enterprises have legal protection.For example, the governments of many countries implement a complete monopoly on public utilities such as railways, postal services, power supply, and water supply, and will also provide legal protection for certain product trademarks and patents within a certain period of time, thus forming a complete monopoly.

It is generally believed that a complete monopoly is bad for the economy.Because it will prevent the free circulation of resources and cause waste of resources, and consumers will not get benefits due to the high price of commodities. The existence of "lonely people" is also not conducive to creativity, and may hinder technological progress.However, these monopoly enterprises have abundant funds and manpower, which are the indispensable conditions for developing high-tech new products.In addition, although some public utilities monopolized by the government are inevitably inefficient due to bureaucracy, it is still good for the whole society not to pursue monopoly profits.

[links to related words]

Monopoly A monopoly is a situation in which there is only one firm in an industry or market.Combined with the provisions of my country's "Anti-Monopoly Law", monopolistic behavior refers to the behaviors that exclude or restrict competition and may exclude or restrict competition.A monopoly can adjust prices and output at will.

Anti-monopoly law refers to the legal system against monopoly and protection of competition.It is the basic legal system of market economy countries.Also known as antitrust law.Anti-monopoly law is still a new legal system in our country.

Cartel An organization consisting of a collection of independent firms producing similar products.In order to monopolize the market and obtain high profits, an alliance is formed through agreements on commodity prices, production and sales.Members of this alliance remain independent in terms of production, commerce and law.Cartels are illegal under U.S. antitrust law.A cartel is one form of monopoly organization.

Trust Literally translated as business trust, trust is one of the advanced forms of monopoly organization.It consists of the merger of many closely related enterprises or products that produce similar goods.The aim is to monopolize the sales market, compete for raw material origin and investment scope, and strengthen competitive forces to obtain high monopoly profits.Participating enterprises lose their independence in production, business and law.

Syndicate is one form of monopoly organization.The transliteration of French syndicat, the original meaning is "combination".One of the important forms of capitalist monopoly organization.A monopoly organization established by a small number of large capitalist enterprises in the same production sector to obtain monopoly profits by signing an agreement on unified sales of goods and purchase of raw materials.The enterprises participating in the syndicate still maintain their independence in terms of production and law, but they lose their independence in business. The sales of goods and the purchase of raw materials are handled by the syndicate head office.There is competition for sales share among various enterprises within it.

Concern is transliterated from Concern, which means "community of related interests". It is one of the advanced forms of monopoly organizations and is composed of many enterprises in different economic sectors.This is a large-scale and complex form of capitalist monopoly organization.Including industrial enterprises, trading companies, banks, transportation companies and insurance companies, etc.It aims to monopolize the sales market, compete for raw material origin and investment places, in order to obtain high monopoly profits.The enterprises participating in Concern maintain independence formally, but are actually controlled by the dominant capitalist group (usually big bank capitalists) through the participation system.

(End of this chapter)