9/19/2023 0 Comments Quasi monopoly examplesThe purchase of Instagram and WhatsApp by Facebook can be cited as a well-known example. This means that potential (future) competitors can simply be bought up and integrated into the company’s own platform in order to protect its own dominant position. This is reinforced by the fact that the location of the corresponding infrastructure is not directly relevant for the business model. This results in increasing economies of scale. Thus, for each additional user of the platform, the costs for the company providing this platform decrease in return. The marginal costs are therefore decreasing, since there is no need for an own (additional) infrastructure for each additional trader on the platform. These include, for example, the large server facilities, rental or office costs. So let’s assume that the expensive digital infrastructure that corporations in the platform economies have to build is the fixed costs. Previously, we have already outlined the theoretical facts of monopolies, in short: increasing returns to scale. Not only do very few forms dominate very large parts of the most significant market, as is generally known, but these firms are now the market themselves.” īut what is the reason for the observed monopoly formation in those industries? As it is often the case, there are a variety of causes that can be cited in this regard. “Platform capitalism revolutionized the liberal economy and changed its rules of the game to such an extent that today, in many cases, there is no longer any question of liberal economics and free markets. The answer to this question can also be introduced with an appropriate quote from the German contemporary philosopher, Richard David Precht: In a quasi-monopoly, there is not only one supplier or producer, but several, with one producer enjoying a strong dominant position due to a competitive advantage. In practice, pure monopolies are very rare. If these factors occur, a company can offer a demanded good more cheaply than possible competitors, which in turn forces these competitors out of the market. In turn, increasing returns to scale means that, as a consequence, the output produced increases faster than the input used to produce it. In contrast, marginal costs are the costs incurred by producing one additional unit of the good produced. These include, for example, rental costs. Fixed costs are costs that generally do not change over a longer period of time and are therefore not directly dependent (in the short term) on the quantity produced. In the economic sense, a natural monopoly often arises when high fixed costs and particularly low marginal costs lead to increasing returns to scale. This is possible in particular in the form of state monopolies, such as in national defense or, until a few years ago in Germany, in postal services and telecommunications, or through the existence of a so-called natural monopoly. A monopoly is a market structure in which market power exists on the supply side because there is only one supplier or producer.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |