Even though there are several types of market competition, large corporations such as McDonald’s have established monopolies to ensure that rival companies never get the same coverage and power. When a firm can gain significant power in the market, it is more likely to increase prices on goods and services (Thoma, 2014). On the other hand, monopolies aim to drive their competitors out of business or threaten new entrants to the market by setting prices below their costs and absorb losses until their competitors cannot survive longer. This practice is especially damaging to family businesses, which are the first to fail under significant pressure from monopolies.
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It should be mentioned that the issue with monopolies goes deeper than economic effects because major companies also have political power and can contribute to changes in regulatory processes (Dechezleprêtre & Sato, 2017).
Large corporations can influence such processes against any threats to their power in the market by removing health and safety regulations, adding licensing requirements to prevent competitors from entering, avoiding sales taxes, participating in congressional hearings, and so on. Nevertheless, not all firms exploit their power or engage in behaviors to damage competitors’ livelihoods, but those that do have invested time and money into becoming renowned firms.
To conclude, the current state of market competition favors monopoly despite its damaging effects (Baker, 2017). Large economies such as the United States have had a long history of monopoly development through innovation and continuous progress to capture target consumers’ attention, which means that it is unlikely that they will stop using their power to gain leverage and influence market relations.
Baker, J. (2017). Market power in the US economy today. Web.
Dechezleprêtre, A., & Sato, M. (2017). The impacts of environmental regulations on competitiveness. Review of Environmental Economics and Policy, 11(2), 183-206.
Thoma, M. (2014). What’s so bad about monopoly power? Money Watch. Web.