ICWA Question:
Explain what are the differences between perfect competition and monopoly competition?
Answer:
In a monopoly, you are gaining an unfair advantage over any competition because you own so many infrastructures. Monopolies used to be known as trusts, which is why you sometimes hear of Anti-Trust Law violations.
At one time, AT&T owned every phone line, every phone and every piece of phone equipment in the country. They monopolized the industry; how could you compete with them when they owned everything? Similarly, the Post Office has an excellent infrastructure for delivering mail, but they do not have amonopoly because FedEx and UPS and DHL have all found ways to carve out a healthy piece of the parcel moving business, so although UPS always grumbles about the Post Office, they do OK in competition.
At one time, AT&T owned every phone line, every phone and every piece of phone equipment in the country. They monopolized the industry; how could you compete with them when they owned everything? Similarly, the Post Office has an excellent infrastructure for delivering mail, but they do not have amonopoly because FedEx and UPS and DHL have all found ways to carve out a healthy piece of the parcel moving business, so although UPS always grumbles about the Post Office, they do OK in competition.
| Previous Question | Next Question |
| Explain the advantage of mixed economy system? | Explain what are the advantages of regional integration? |