Advantages and Disadvantages of Monopoly in Trade and Business

ADVANTAGES AND DISADVANTAGES OF MONOPOLY:

From the study of monopoly, it is apparent that the monopolist exploits the consumers by setting a maximum profit due to its strong position in the market, but despite this,the monopoly has some solid advantages. 

Let’s discuss in detail the advantages and disadvantages of monopoly.

 

Advantages of monopoly:

1:-A monopoly business is usually done on a large scale, allowing the firm to obtain all internal and external advantages such as excess cruel capacity, cheap production factors, sales leverage, installation of efficient machinery, and in the result of other facilities a monopolist can reduce production expenditures.

 

2:-When different employers together  establish a self-made monopoly, as a result, the nature and speed of production can be improved and harm can be reduced by combining the best talents.

 

3:-In times of cold market or economic crisis when government intervention in business matters is necessary, it is easier for the government to regulate the conditions of production in the presence of monopoly.

 

4:-Innovations and new production techniques are urgently needed to improve the production process. These inventions and production methods are achieved after a lot of research and experience and cost a lot of money. The employers of perfect competition can not bear these expenditure. These expenditures can bear only a monopolist employer.

 

5:- If there comes a hard time for business then a common business man conceders it better to stop the business but a monopolist business man being financially strong can face these circumstances.

 

Disadvantages of monopoly:

1:-A monopolist keeps the volume of production at a low level intentionally therefore his creates fewer opportunities for workers.

 

2:- If monopolies are established in all the industries of the country, then the demand of workers will become less and it will be a wastage of resources of a country.

 

3:-Because the monopolist is not afraid of competition. Hence, he does the business through ineffective methods.

   

4:- In monopolistic system the distribution and utilization of agents is not carried out for the betterment of consumers but the purpose of policy is only to set high prices and to earn high profit.

 

5:-A monopolist usually sets high  prices for his good, which exploits consumers.

 

6:- Monopolies encourage unequal distribution of wealth in the country. The financial disparity between the rich and poor classes in the country widens and discontent spreads among the wider sections of the society.

 

Despite the above disadvantages of monopolies, it is fair to say that under government control, the aggressive actions of monopolies can be limited, the country's economy can be protected from their harmful effects. And it becomes easy the use of monopolies for the wider interest of the country through government regulations in crucial conditions.