Monopoly Impact and Regulation Analysis
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schellMonopoly Impact and Regulation Analysis
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schellRWE on Monopoly
Google Search has a global market share of 92%, a clear leader in the search engine market
with significant monopoly power. Investigations by the European Competition Commission
found search results to direct consumers specifically to Google products or products of firms
who advertise on Google regardless of good value for consumers.
Amazon and Apple have also been accused of using their global monopoly power to
discriminate against 3rd party sellers with Apple also charging higher prices for their own
apps on the App store.
A) Define monopoly
B) Draw and explain a graph for a monopoly making abnormal profits
C) Draw and explain a graph that compares monopoly and perfect competition
D) Evaluate the impact of monopoly on the following stakeholders:
a. Consumers
b. Producers
c. The government
d. Society as a whole
E) Evaluate the positive and negative consequences of the following policies:
a. Regulate prices (e.g. price caps).
b. Fines. For example, pharmaceutical company Advanz was fined £100m in
2021 because it increase the price of thyroid drugs by 6000% over a ten year
period, from £4.46 in 2006 to £259.19 in 2017.
c. Prevention of mergers. For example, in 2018 ASDA and Sainsburys proposed a
merger which would have given them a combined market share of 30%. The
government refused permission for it to go ahead.
d. Performance targets / quality standards. For example, airline companies are
forced to pay compensation if flights are delayed and passengers arrive at
their destination 2 or more hours later than scheduled. However, companies
can game the system by advertising longer than expected journeys, reducing
the risk of compensation.