Introduction
Throughout the long decades during which governments and societies fought against the monopolies, cartel conspiracy for the sake of artificially raising prices and unjustified enrichment was the first evil stemming from their existence. It was incriminated to companies that had dominant positions in individual industry markets. However, such an argument cannot be applied to technology giants as almost all their customers do not enter into financial relations with them as it was 30 years ago. The expansion of these corporations rather significantly reduces than increases prices that the consumer has to pay. For example, one may find a three-time cheaper cable on Amazon in comparison with prices on Staples.
The rapid growth of companies that eventually became dominant in their fields is a crucial issue for many economists and politicians. However, today, it is evident that a new segment of the global economy has emerged (Moazed & Johnson, 2016). For instance, Google is capable of developing not only in the conditions of a steady reduction in costs (as the production of information hardware has demonstrated) but also with the free distribution of its core product. It creates centers of consumer attraction that investors rate higher than any other asset. Hence, it seems unnecessary and even harmful for the modern economy to break up such giants as Amazon, Apple, Facebook, or Google. It will cause a plethora of issues starting from unemployment and ending with the reduction of the quality of crucial goods and services.
Furthermore, it should be stated that there are still substantial sources of monopoly power in the global market available for the companies mentioned. Among these barriers of entry are economies of scale, patents, expensive lawsuits, and positive network externalities (Webster, 2014). Thus, to increase competition without breaking up the companies above, several actions to decrease the influence of these factors might be undertaken. For instance, courts may reduce the costs for the lawsuits against small companies regarding patent matters so that the legal process would not be so expensive for them. Court systems may define these expenses depending on firms’ size (a fixed percent from revenue) rather than taking established costs.
Response to “Market Power and the Big 4”
The discussion contains a couple of significant ideas and assumptions that provide the recipient with the opportunity to gain an in-depth understanding of the current situation in the international market. The author gives reasonable thought about the reduced possibility of entrepreneurs to be successful due to the vast market power of Amazon, Google, Apple, and Facebook. It is also true that the performance of the mentioned companies results in price savings. However, another substantial factor is that the Big 4 imposes its terms and prices on suppliers, which may be considered as a case of unfair competition. The author proposes an interesting option to increase competition – to put legal restrictions on reducing the price and to limit the number of products sold. Thus, the discussion demonstrates strong arguments and even lights the way of future research.
Response to “Penalizing success? Market Power Explored”
The author asks relevant questions and provides a strong thesis statement at the beginning of the discussion, which positively impacts on the further arguing. It is stated that breaking up the biggest companies in the international market will severely affect the global economy. This argument may be considered reliable, and it coherently leads to the core statement of the work – the Big Four does not have a monopolistic character but rather an oligopolistic one. Within the scope of the scholar dimension, opinions on the topic discussed are divided, and many academics assume that the four biggest companies as monopolies. Nevertheless, the author demonstrates the exhaustive rationale and a solid train of thought. Moreover, the discussion contains a detailed analysis of the Big Four’s success and significant propositions on increasing competition, such as mitigating competitive advantages.
References
Moazed, A. & Johnson, N., L. (2016). Modern monopolies: What it takes to dominate the 21st century economy. New York, NY: St. Martin’s Publishing Group.
Webster, T. J. (2014). Managerial economics: Tools for analyzing business strategy. Lanham, MD: Lexington Books.