Part of what’s going on is something economists call the “network effect.” A network effect occurs when the value of a company to a user increases as more people use the same company. The Internet situation is interesting because it’s an evolving market. In North Carolina, a proposed partnership between the state’s two largest health care companies has raised questions about the power of the new mega-company and its impact on medical prices. At the national level there’s a claim that some large Internet-based companies may be close to achieving monopoly status in their markets. Yet today we’re seeing a revival of the issues over monopolies. Monopolies were a big deal a century ago, but since then laws and regulations have been implemented to reduce or contain them. This may cause monopolies to avoid improvements and investments that benefit consumers. Having a “lock” on buyers means monopolies may not be as sensitive to customer service as a competitive firm. As a result, monopolies make higher profits. Since they face no competition, monopolies tend to charge higher prices than if they had to worry about customers buying from someone else. The monopoly company is therefore clearly in the driver’s seat.Įconomists have several concerns about monopolies. Buyers have no alternatives for buying the product or service. In economics monopoly is a form of market structure where one company controls all sales. The best situation is owning all the properties on a street, thereby almost guaranteeing all players will have to pay the owner fees as they round the board. Players landing on your property have to pay a fee. Monopoly is a board game with the objective of controlling properties on the game’s four streets. An added bonus was the availability of snacks – something my mother usually prohibited after dinner. On a Saturday morning my mother would announce, “tonight is Monopoly night.” That evening the family would gather around the dining room table and play Monopoly for hours. One of my favorite games as a child was Monopoly.
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