...one must look at actual cases in which organizations have been investigated for violation of Antitrust Laws. In the following paper, I’ll be focusing on Apple’s antitrust investigation. Additionally, we’ll identify some costs associated with the antitrust behavior, and why Apple was investigated? To conclude, we’ll then shift our focus to weighing out whether or not monopolies and oligopolies benefit society, with at least looking at one study where they did benefit. Apple Gets Investigated and Charged Apple, which has an oligopoly market structure because of their number of competitors, pricing similarities and dependencies with other vendors, was hit with a huge fine for antitrust violations (in the 840 million range). Apple was investigated for helping facilitate a price hike in the e-book market space by colluding with major publishers. The U.S. Department of Justice said this conspiracy was designed to undercut online retailer, Amazon.com Inc’s dominance of the fast-growing e-book market (Reuters, 2013). However, what really drew attention was the immediate price increase for books that the specific publishers that had an agreement with Apple implemented (Sagers, 2013). By cutting out Amazon, Apple could have changed their economy of scale since they were positioning themselves as a powerhouse in the E-book space. Other organizations, such as Amazon, would have experienced barriers to entry into the market, especially...
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...Discuss the view that monopoly power is the natural result for firms who ‘win the game’ of competition? Monopoly power or market power is the ability for a business to earn high levels of profit by being able to choose their pricing strategies in their market and being able to raise to what they want in the same market and don’t have to worry about to losing costumers if they have true monopoly power then price still shouldn’t effect there demand. Being a monopoly means they are the only supplier in that market. They are able to keep their prices high for a sustainable amount of time. There are only certain companies that are able to higher prices for measurable periods of time these companies have little or no competition in the market so that by increasing the prices wouldn’t mean a loss of costumers and income because there is no competition in there market. It lies at one end of the spectrum of perfect competition it means that there is only one seller in that market that they are able to be the dominant firm and exert a considerable amount of power. (William J. Baumol EconomicsPrinciplesP264-269) There are no preliminary assumptions about the bargaining power of any of the players, and, in particular, no player is assumed a priori to have any price setting power. Provide general core results for monopoly, and their results suggest the following conclusions. First, if the seller has the capacity to supply all of the buyers, the outcome is almost completely...
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...iPod Apple’s quiet monopoly Prelude Apple’s iPod a revolutionary portable media player was launched in 2001. Being a striking piece of innovation with no comparable substitutes at that time it had a roaring success in worldwide. Till today, the quarterly sales of iPod worldwide continue to vary between 9 and 10 million ( [ Figure 1 ]). Even after the introduction of Microsoft’s Zune digital media player in 2006 and the existing players produced by companies like Creative, Sony, Samsung etc, the Apple iPod continues to hold a market share of approximately 80%. In this sense, one can be tempted to conclude that iPod can be said to be in a monopoly position because of its well established market dominance. Consequently from our previous deduction we may also conclude that Apple's iTunes Store1 has a monopolistic lock on digital music. The purpose of this paper is to analyze about how much of the above conclusion is valid from an economic point of view. Figure 1 iPod Sales Source: Wikipedia [1] iTunes is a proprietary digital media player computer application, used for playing and organizing digital music and video files. It can connect to the iTunes Store to purchase and download music, music videos, television shows, games etc. Is it truly a Monopoly? Apple’s majority market share in the portable personal media player market and in legal downloads in the iTunes Store often becomes a matter of comparison with Microsoft’s monopoly position in the Personal...
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...What kinds of economic and technological conditions are conducive to the formation of monopolies? In today’s economic climate, several instances of economic and technological conditions have proved conducive to the formation of monopolies or ‘attempted’ monopolies. From television stations to computer applications, the effects of monopolies can be felt by consumers across the globe. One of the most prevalent industries to see the rise and fall, and rise again of monopolies is the telecommunications industry. The Telecommunications Deregulation Act of 1996 was passed to break up the monopoly held by AT&T and to promote competition and lower prices benefitting consumers. In less than 20 years, the telecommunications industry stands on the brink of yet another monopolization by the biggest names in the business. Sprint (who purchased Centel and then Nextel) AT&T (who bought former SBC, BellSouth and Cingular) and Verizon are the big players in the telecommunications industry today, not only in the soon to be obsolete land-line business, but also in cellular communication, broadband, and digital media markets providing services such as digital cable television and on-demand movies. What technological condition has caused this? In a word; innovation. Consumer demand for more convenient ways to communicate with one another, cell phones, reliable networks, instant communications, smaller devices providing bigger services…the list goes on and on. We want more, better, faster…oh...
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...capital out of which to make things. Consequently, society must be very attentive when figuring out how to best convert its limited resources into the goods and services that people mostly desire. Firms may or may not face a lot of competition from other firms. At one extreme lies monopoly, in which a firm faces no competition because it is the only firm in its industry. At the other extreme lies what economists call perfect competition, a situation in which a firm competes against many other firms in an industry in which they all produce an identical good. Between the extremes lie two situations: oligopoly, where there are two or more firms in an industry; and imperfect (monopolistic) competition, in which there are many competitors, but each produces a slightly unique good. Market Simulation Market structure is not a concept that is stable. In fact, it is not uncommon for a firm to have more than one market structure over time. It is interesting to examine how the dynamics of market structure evolve by adding competition. The market simulation showed a great example of market structure evolution. In the simulation Quasar entered the computer market with cutting edge technology making it a monopoly. Team B then recognized that investing in advertising was profitable for Quasar only if it reduced the price of its computers. In this market there are no changes in the suppliers and we saw an increase in consumers after investing in advertising. The dynamics of the market changed...
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...Market Structures ECO 204 Principles of Microeconomics Instructor: Christine Villasenor August 26th, 2013 Market Structures Every business throughout the business world will run their company in one of the four business structures. I am going to show the different examples of the different market structures of perfect competition, pure monopoly, monopolistic competition and oligopoly. Perfect competition is a big number of firms all making a familiar product that not one producer can affect the change in price. “If changes in nominal aggregate demand do not affect real output and employment, a financial crisis cannot be very important. However, the neutrality result does not really apply in the real world, either in the short or long runs.”(Ng, Y. 2009) An example of pure competition would be farms that produce common vegetables that we buy at the grocery store. There are so many farmers that produce fruits and vegetables that if one of them were to try to affect the market by lowering or raising prices, it would not really affect the prices of the rest of the market. But if a large portion of farmers where to work together about raising or lowering prices, we would see it affect the market more. “In reality, perfect competition is more theory than actual fact. While there are rare situations in which a marketplace functions with pure competition for a short period of time, the situation normally shifts as various factors change the stalemate created by...
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...selling gasoline for instance) one firm won’t be affected if another raises their prices. It is likely only that seller will reap the consequences of that action. Competitive markets occur when many buyers and sellers compete for the same market. The way that competitive markets maximize profits is producing the quantity at which marginal cost equals marginal revenue. This also determines the quantity that competitive markets output. The firms don’t want to create so many products that it is not being bought. If the revenue is more than the cost to produce then the firm would increase its output. Monopoly is more than just a popular board game by Hasbro; a monopoly (very much like the board game) is when one individual seller controls most or all of one particular good. Not having any competition makes it easy to charge any price and supply goods when it’s convenient for the firm. Take Apple electronics into consideration. They are certainly not the only maker of tablets, phones, or mp3 players in the market today but they are the...
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...be a monopoly of every industry, trade, marketing, and services. This would in-turn lead to higher prices for the consumer, lower quality products, less innovation, and poor service. As I mentioned in my opening sentence, I will bring up two individual cases that the DOJ (Department of Justice) is pursuing when it comes to Antitrust Laws. I would like to begin by quoting the DOJ’s mission statement. Mission “The mission of the Antitrust Division is to promote economic competition through enforcing and providing guidance on antitrust laws and principles. Antitrust Laws The goal of the antitrust laws is to protect economic freedom and opportunity by promoting free and fair competition in the marketplace. Competition in a free market benefits American consumers through lower prices, better quality and greater choice. Competition provides businesses the opportunity to compete on price and quality, in an open market and on a level playing field, unhampered by anticompetitive restraints. Competition also tests and hardens American companies at home, the better to succeed abroad. Federal antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade, such as price-fixing conspiracies, corporate mergers likely to reduce the competitive vigor of particular markets, and predatory acts designed to achieve or maintain monopoly power...
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...Microsoft Monopoly Table of Content Introduction…………………………………………………………………………...page 2 Body…………………………………….………………….………………………… page 2 Conclusion…………………………………………………………………………..... page 3 References…………………………………………………………..……………....... page 5 Microsoft Monopoly In the late 1990s and into the millennium Microsoft was under litigation for anti-trust behavior. This lasted for many years, and was over Microsoft bundling its products into its operating system such as internet explorer. Some say that Microsoft was charging computer manufactures more money for their operating system if they installed Netscape instead of internet explorer when they sold the computer. Many states engaged in the lawsuit, along with some computer groups. Initially the DOJ or Department of Justice filed suit with in the Federal District Court stating that Microsoft violated an agreement signed in 1994, and asked that Microsoft stop bundling Internet Explorer in its operating system. The courts and Microsoft came to a settlement, after four long years. Bill Gates founder of Microsoft did not believe he Microsoft did anything wrong. However James Allchin, the Microsoft vice president for platforms who ran the development of XP, says that Microsoft learned several lessons from its antitrust experience, including that Microsoft needs to take a stronger leadership role in the industry. "We've been a leader--and we can do better," he says. Although Mr. Gates was unsure of what Mr. Allchin was talking...
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...Business organizations such as Apple produce and sell goods at a certain price. If customers are not happy with the output this can withhold revenue from a company like Apple. Their profit is based on how many units are sold. Apple is a public company that sells private goods. A private good is a good that is exclusively made for a profit, and there is rivalry involved in obtaining the product or service. Private goods can include clothing and food. A common resource is a good or service which provides users with tangible benefits. Like public goods, these goods are non-excludable, but they are rival. They include things that every person has a right to use, and could also include things in which people contribute to the production of. This may include items in which the public has paid for the production through taxation. They are goods such as water and public parks. To the disadvantage of everyone, overuse of common resources may lead to that resource running out over time. A natural monopoly occurs when a company has a large cost advantage over other competitors in the market. Like private goods, a natural monopoly is exclusive, but has no rivalry. The government is able to regulate the natural monopolies, which ensures that people are charged a fair price. Utility companies would be considered natural monopolies. A public good is a good or service which is non-excludable, and which has no rivalry. It is financed through taxation, and is available...
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...Macro & Micro Economics By: Managerial Economics Tutor: Ellie Semsar Institution: 13th August 2013 Introduction Early trades were controlled by agricultural products because there was a high difficulty in investing on other trades, therefore market trade was highly vulnerable to price fluctuation and could face a lot of manipulation (Bain 2013). During these times the cost of production was high compared to the market price, this really undermined industrial production. However, during the late 90’s and early 21st century, there was an increase in commodity prices. Other trade development that has since changed is the increase in exchange of commodities, due to this, demand and supply is no longer the only factors that determine the variation of price, the other factors have encroached in, for example the interest rates, exchange rates and global liquidity trends (Bain 2013). Mobile industry is one of the latest profitable investments that have come along with the trend in technology, many countries obtain their revenue through this trade many other advantages due to mobile technology are the rise of many companies that have now come into being and employment has also gone up. Many industries produce different versions of telephone devices all of which are introduced to the market and can clearly be seen that the prices are not the same. Mobile phone markets are one of the robust markets now days as a result of product competition and the good thing is that...
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...competition, monopolistic competition, oligopoly, monopoly. An Economic Question: If you imagine a competitive market structure continuum, with perfect competition on the far left and monopoly on the far right, where would you place Apple? Apple, Inc. is on the leading edge of technology and customer satisfaction. The Apple brand name is known world-wide. In addition to notoriety, they have employees and stores in over 15 countries. Their strong business sense has set the bar high for their competitors, in regards to both profitability and sustainability. They are currently at the top of all markets and have continually increased profits year after year. Apple has a strong foundation formed on many factors. In this paper, we will explore those factors, as well as their strengths and weaknesses. We will also point out the key factors and make recommendations on what we feel would benefit the future of Apple, Inc. Introduction Steve Wozniak, then 26 years old and Steve Jobs, 21, both college drop-outs, wanted to start a company, but they didn’t know what to name it. Jobs had worked during the summer at an apple farm and he believed that the Apple was the most perfect fruit. As he and Wozniak were trying to figure out a name for their company, Jobs suggested Apple. They decided that if they couldn’t think of anything better by the end of the day, they would choose Apple. Well, they couldn’t think of anything better so on April 1, 1976, Apple Computer was founded. Their partnership...
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...the use of examples explain the various barriers to entry to a market and how these barriers might affect market structure Barriers to entry are designed to block potential entrants from entering a market profitably, they seek to protect monopoly power and usually have the effect of making a market less contestable. In a perfectly competitive market barriers to entry are not allowed as otherwise the market would not be perfectly contestable as one firm will have an advantage over another. One barrier to entry in a market is research and development. Heavy investment into research and development from large firms can deter other firms from entering into a market. Research and development also goes into developing new products such as Dyson creating the bag less vacuum cleaner, this leads to firms acquiring patents, where the firm has legal protection over a design or a product for twenty years. Patents are very good at creating monopolies as they restrict entry into certain markets, as in my previous example with the bag less vacuum cleaner, Hoover tried to copy this idea however were taken to court by Dyson leading to Hoover having to take their product off the market and paying substantial fees to Dyson. This therefore led to a monopoly on the bag less vacuum cleaner; therefore Dyson had complete market power and could increase the prices of their products. Another barrier to entry also related to research and development is the R&D that goes into making the processes...
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...carry. Apple has created a phenomena when they released the innovated iPhone to the world in 2008 which took this company to new heights. Apple Inc started its revolution of the technological industry in 1976 with its found Steve Jobs. Apple Inc has evolved throughout the many years; starting with motherboards for personal computers to later developing their own systems. Apple has always been making strides to becoming the leading provider for personal devices. Upon the success of the iPods, Steve Jobs developed a new pioneering product that would take the cell phone industry to the next level, in 2007 Steve Jobs stood in front of a panel of consumers and demonstrated his new creation of the iPhone First Generation. The crowd stood up and gave a roaring applauds that echoed throughout the room. After that day, he worked to perfect his creation with adapting it to many different functionalities through his various versions of the project. Apple has always been in a leauge of their own until other companies decide to compete with the iPhone. The smart phone uproar has begun with companies like Samsung, LG, Pantech, and HTC started to develop their own interpertation of a smart phone. Companies utilize their consumer's different personality to find them a perfect suit for their needs. Apple started their smart phone as a monopoly for the first couple months until the release of the first Samsung smart phone to combat the epidemic of the phone that could do it all. Apple has created...
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...Apple Inc University of Redlands Abstract Apple Inc (previously known as Apple Computers Inc) is a market leader and an iconic American company. They provide an interesting example of micro-economics as they operate in a competitive industry – high tech consumer electronics, but they have differentiated themselves so well, they operate almost like a monopoly. This paper will explore the uniqueness of Apple that makes them an economical oddity. Company Overview Apple Inc. (originally Apple Computers Inc.) was formed in 1977 and is a $500 billion company, employing 75,000 people worldwide. It sells consumer electronic products, software and digital content. Its primary product lines are the Macintosh, iPod, iPhone and the iPad. It is, by far, the largest company in the world in terms of market capitalization and is more than twice the size of Wal-Mart. This sheer size makes Apple an important to our component financial composition. Many people own shares of Apple without even realizing it, as most pension funds and stock mutual funds have a significant amount of Apple stock. It’s also an important company in terms of technology that touches our lives. Niche and Following Apple products have a fiercely loyal following. Many of its customers wouldn't even consider a competing product. There have been a series of bugs and technical oversights in its products and software. Who could forget the famous antenna snafu? Despite these issues, Apple's customer base...
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