Monopolies are Good for Businesses & Society
When people hear the word “monopoly,” they tend to think of large, evil companies unfairly squeezing out the competition.
This is inaccurate.
Conventional wisdom holds that competition is the ideal economic stimulus, encouraging companies to improve on each others' products.
However, it's actually monopolies that drive innovation.
How can that be?
First of all, if you have a monopoly, it doesn't necessarily mean the competition is being treated unfairly.
Rather, you're just doing something so much better than them that they can't survive.
Similarly, if you create something new that no other company can copy, it's not necessarily a bad thing.
@Google clearly has a monopoly over the search-engine industry, having faced virtually no competition whatsoever in the twenty-first century.
This might seem unfair to other companies who'd like to compete, but it's certainly been good for everyone who likes using Google's powerful search engine.
What's more, monopolies are good for society because they drive progress: they encourage other businesses to come up with better solutions and oust the current dominant company.
For example, if a company wants to compete in the search-engine market today, it needs to invent a better search engine than Google.
And, if it does, it'll be the consumers who benefit.
In fact, we can even go so far as to state that having a monopoly is a condition of running a highly profitable business.
Why?
Because having a monopoly allows you to set your own prices, which in turn ensures high profits.
If your product is no better than your competitors', you'll have to set your prices low to entice customers away from the competition, which erodes profit margins.
Take the highly competitive airline industry where prices are set so low that, in 2012, a single passenger trip generated a measly $0.37 of profit.
Google, on the other hand, keeps over a quarter of its revenues as profits.
Monopolies simply mean you're doing something better than everyone else.
Monopolies are Good for Businesses & Society
When people hear the word “monopoly,” they tend to think of large, evil companies unfairly squeezing out the competition.
This is inaccurate.
Conventional wisdom holds that competition is the ideal economic stimulus, encouraging companies to improve on each others' products.
However, it's actually monopolies that drive innovation.
How can that be?
First of all, if you have a monopoly, it doesn't necessarily mean the competition is being treated unfairly.
Rather, you're just doing something so much better than them that they can't survive.
Similarly, if you create something new that no other company can copy, it's not necessarily a bad thing.
@Google clearly has a monopoly over the search-engine industry, having faced virtually no competition whatsoever in the twenty-first century.
This might seem unfair to other companies who'd like to compete, but it's certainly been good for everyone who likes using Google's powerful search engine.
What's more, monopolies are good for society because they drive progress: they encourage other businesses to come up with better solutions and oust the current dominant company.
For example, if a company wants to compete in the search-engine market today, it needs to invent a better search engine than Google.
And, if it does, it'll be the consumers who benefit.
In fact, we can even go so far as to state that having a monopoly is a condition of running a highly profitable business.
https://media.giphy.com/media/ADgfsbHcS62Jy/giphy.gif
Why?
Because having a monopoly allows you to set your own prices, which in turn ensures high profits.
If your product is no better than your competitors', you'll have to set your prices low to entice customers away from the competition, which erodes profit margins.
Take the highly competitive airline industry where prices are set so low that, in 2012, a single passenger trip generated a measly $0.37 of profit.
Google, on the other hand, keeps over a quarter of its revenues as profits.
Monopolies simply mean you're doing something better than everyone else.
https://www.youtube.com/embed/nOQc6DopiKQ?start=46&end=77
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