A Monopoly Market Player: Apple Case Study

Exclusively available on Available only on IvyPanda® Made by Human No AI

A monopoly market player is a firm, which is the only one existent in a market. Monopolization is when a firm has a significant control to set the prices in a multiplayer market.

In 2005, even with more than one player in its market segment, Apple was able to sell a more expensive product and achieve 63% control of digital music players and 83% control of legal digital music download market. Such an achievement was made through leveraging on its ITunes store and stylish status of iPods.

In charging high products, Apple built a premium and exclusives status for its products. Over the long term, this will create a cult like following for its products as long as the firm can keep on developing digital music players with the better technology than that of its competitors.

This will require massive investment in idea and technology generation and development. Low sales numbers can easily lead to the company being bankrupt. In conclusion, charging high prices is a risky but highly rewarding option (Manikw, 2008).

Diagram 1 represents a monopoly market. A monopolist is a price maker because the company does not face any competitors in such a case. Thus, there is a price inelastic demand where marginal cost meets marginal revenues, which represents the quantity for profit maximisation.

The extrapolating the output up to its maximum to meet the average revenue and cost curves, we arrive at the prices P1 and P2. The total cost of production is P1Q1, while the total revenues are P2Q2; the difference is the supernormal profit.

Considering diagram 2, prices decrease from P1 to P3, while quantity sold has an increase from Q1 to Q2. This is due to a different demand pattern brought about by different demographic and physiographic population factors, while a different cost pattern brought about by a change of the tax regime affects the cost pattern resulting in a different price maximizing output and different prices.

First, for price discrimination to take place, it must be performed in different geographical markets. Secondly, market segmentation is based on different demographic and physiographic population factors. Thirdly, inelastic price elasticity of demand ensures the advantage of price discriminators (Manikw, 2008).

Monopolies and oligopolies are vital firms in a country especially if they can work competitively to bring new products to the market, while providing job places.

Secondly, they accumulate large amounts of capital to the benefit of economy. However, consumer and labor groups have no trust in monopolies and oligopolies achieving this economic function without government oversight.

Arguments for intellectual property rights include giving the right of intellectual property to its owner, who can use it for financial gain. The right to own an intellectual property is a result of hard labor and investment in creating it.

Thus, development to humanity would not occur from private entities but only from the government. The socialist and economic growth would follow the government’s agenda. Margins for firms would be thin since it is a price market (Dwivedi, 2002).

Every industry deserves to obtain its intellectual rights, especially considering the economic significance of motivating capital and expertise investment.

In such areas as healthcare, its importance to ensuring human rights observance and proper solutions to human health problems is significant. For such markets, additional control by government authorities is necessary to balance morality and intellectual rights (Perloff, 2009).

Diagram 1 - Monopoly Abnormal Profits.

Diagram 2 - Price Discrimination.

References

Dwivedi, D. (2002). Microeconomics: Theory and Application. India: Pearson education.

Manikw, G. (2008). Principles of microeconomics: a guided tour. Connecticut: Cengage Learning.

Perloff, J. (2009). Microeconomics. London: Pearson/Addison Wesley.

More related papers Related Essay Examples
Cite This paper
You're welcome to use this sample in your assignment. Be sure to cite it correctly

Reference

IvyPanda. (2019, April 24). A Monopoly Market Player: Apple. https://ivypanda.com/essays/a-monopoly-market-player-apple-case-study/

Work Cited

"A Monopoly Market Player: Apple." IvyPanda, 24 Apr. 2019, ivypanda.com/essays/a-monopoly-market-player-apple-case-study/.

References

IvyPanda. (2019) 'A Monopoly Market Player: Apple'. 24 April.

References

IvyPanda. 2019. "A Monopoly Market Player: Apple." April 24, 2019. https://ivypanda.com/essays/a-monopoly-market-player-apple-case-study/.

1. IvyPanda. "A Monopoly Market Player: Apple." April 24, 2019. https://ivypanda.com/essays/a-monopoly-market-player-apple-case-study/.


Bibliography


IvyPanda. "A Monopoly Market Player: Apple." April 24, 2019. https://ivypanda.com/essays/a-monopoly-market-player-apple-case-study/.

If, for any reason, you believe that this content should not be published on our website, please request its removal.
Updated:
This academic paper example has been carefully picked, checked and refined by our editorial team.
No AI was involved: only quilified experts contributed.
You are free to use it for the following purposes:
  • To find inspiration for your paper and overcome writer’s block
  • As a source of information (ensure proper referencing)
  • As a template for you assignment
Privacy Settings

IvyPanda uses cookies and similar technologies to enhance your experience, enabling functionalities such as:

  • Basic site functions
  • Ensuring secure, safe transactions
  • Secure account login
  • Remembering account, browser, and regional preferences
  • Remembering privacy and security settings
  • Analyzing site traffic and usage
  • Personalized search, content, and recommendations
  • Displaying relevant, targeted ads on and off IvyPanda

Please refer to IvyPanda's Cookies Policy and Privacy Policy for detailed information.

Required Cookies & Technologies
Always active

Certain technologies we use are essential for critical functions such as security and site integrity, account authentication, security and privacy preferences, internal site usage and maintenance data, and ensuring the site operates correctly for browsing and transactions.

Site Customization

Cookies and similar technologies are used to enhance your experience by:

  • Remembering general and regional preferences
  • Personalizing content, search, recommendations, and offers

Some functions, such as personalized recommendations, account preferences, or localization, may not work correctly without these technologies. For more details, please refer to IvyPanda's Cookies Policy.

Personalized Advertising

To enable personalized advertising (such as interest-based ads), we may share your data with our marketing and advertising partners using cookies and other technologies. These partners may have their own information collected about you. Turning off the personalized advertising setting won't stop you from seeing IvyPanda ads, but it may make the ads you see less relevant or more repetitive.

Personalized advertising may be considered a "sale" or "sharing" of the information under California and other state privacy laws, and you may have the right to opt out. Turning off personalized advertising allows you to exercise your right to opt out. Learn more in IvyPanda's Cookies Policy and Privacy Policy.

1 / 1