Stefany Alicea

Economics
Julio Alicea
The Pros and Cons of Monopolies
If you were asked to name the first companies that came into your mind, they would
most likely be monopolies. A monopoly can be summarized as a company with a majority or
complete domination of an industry; they can come about, from a single producer, or a single
company consuming or buying out its competition. In our day and age, it is often times the
large and powerful companies overpower not only their industry, but our minds. Large
companies such as Comcast, Apple, Sprint and AT&T are ever present in choices of producers
in our economy.With the amount of influence and power these companies have it is hard to
decide to be scared of them, or simply go with the currents and embrace them. The
government, however, has decided that monopolies provide a threat to our free-market
economy, thus implementing Antitrust laws, which are laws against monopolies, working to
diminish their control over an industry. Still, it may not be easy deciding whether they are a
completely negative phenomena or if the benefits they provide have significant value.

Monopolies bring about certain unexpected advantages. A monopoly usually becomes

more powerful, through the profit it receives, and is therefore able to provide additional services
to consumers. Recently, Comcast, a dominating internet and cable company, tried to buy-out
Time-Warner Cable, one of its competitors. Although this deal didn't go through, there were
some customers who felt it would have improved the overall quality of the service. In the article,
published by the New York Times, Comcast-Time Warner Cable deals collapse leaves
frustrated customers out in the Cold, a hopeful consumer is quoted expressing their hopes that
the Comcast merger would have an increase in the quality of the service. When monopolies
merge, their profit intake increases, making it more possible for improvements to be made. This

in turn benefits the customers as well, but unfortunately there aren't any rule or guidelines for
the company's investment.
A similar situation arose in March, when AT&T proposed to buy-out DirectTV. In spite of
the possibility of AT&T being one step closer to becoming a monopoly, these merger seems to
be heading in the right direction; which was not the case, when in 2011 AT&Ts conquest of TMobile was shut down by the Justice Dept. (New York Time) . Not only was there no attempt to
dismantle this combination, but the Federal Communication Commission [saw] the AT&T deal
as helping competition and aiding the spread of broadband into rural [lacking] areas(Wall
Street Journal). It seems that monopolies bring about a set number of possible advantages,
such as the ability to invest heavily in infrastructure, providing jobs and stimulating the economy
while improving customer service. All in all, monopolies do bring forth some apparent
advantages.

Nonetheless, the small advantages that a monopoly may bring about to customers and
the economy, are heavily outweighed by the inevitable negative effects they have on the
economy. The numerous disadvantages that a monopoly brings about include, but are not
limited to, a reduction of competition and quality of goods, higher prices and the removal of
power from the consumers. In a free-market economy, consumers are the power force, pushing
companies to become more innovative, and lower their prices while increasing the quality of the
goods, to make sure they maintain business. During 2011, AT&T's attempt to merge with TMobile, and strengthen its power over the cellular industry, failed as the Justice Dept.stated that
the combination of these two giant cellular companies would result in higher prices and [...]
fewer innovative products (New York Time).
Coincidentally, the same concerns were arising in a different situation. In the ComcastTime Warner Cable situation, customers of the leading cable and internet company, express
their worry about danger of having so few options. Susan P. Crawford, co-director of Berkman

Center for Internet and Society at Harvard, explains that monopolies have a high rate of
unhappy customers due to the fact that they are not subject to [either] oversight or competition
(New York Times). Thus leading to the conclusion that monopolies harm the economy in more
ways that theyd like to admit.

The few advantages that are presented when a monopoly is produced do not compare
to the overall disadvantages that the economy and customers must face. Due to the lack of
competition monopolies decrease the quality of goods, while simultaneously increasing the
price. This unbalanced structure of power, where most of the power is taken from the consumer,
is exactly what makes monopolies so dangerous. Although monopolies have the means to
provide additional services which could provide jobs, they fail to account for the loss of jobs they
bring about (through buying out companies, forcing smaller companies to shut down). Looking
at both side of this debate, it is easy to conclude that monopolies bring an extensive amount of
damage to an economy, validating the implementation of Antitrust laws against monopolies. In
conclusion, monopolies are a threat to our free-market economy and any advantage they bring
about is overshadowed by the numerous disadvantages customers and the economy must deal
with.

Outline:
Audience: everyone with a basic knowledge of economics
purpose: to explain the pros and cons of a monopoly
thesis: A: A monopoly usually becomes more efficient, through the profit it (creates/gets?), and
is therefore able to provide additional services to consumers.

B: The numerous disadvantages that a monopoly brings about include a reduction of

competition and quality of goods, and take away the power consumers have.