Monopolies may benefit certain situations, even if the costs exceed the advantages. Patents are the most evident example of a trust benefiting society. After 20 years of exclusivity, patents revert to the public domain, allowing innovators to commercialize their creations. That is, patents allow innovators to have a 20-year monopoly. Copycats will steal an inventor’s concept and flood the market with rip-offs, resulting in a collapse in the price if patents aren’t obtained. Inventors would spend significantly less time, effort, and money if they didn’t have the protection of patent laws (Meghani, 2021). Patent offices have been set up in several countries throughout the globe to help innovators get their inventions protected. Consequently, new technologies are being developed at a quicker rate, resulting in faster economic development and higher living standards for everyone. It is hard to think of a better example of the societal benefits of monopolies than patents.
When free-market competition is inefficient, the price to consumers is controlled, or high risk and high entry costs prevent investment in a crucial industry, monopolies are deemed beneficial or economically advantageous. For example, a government may impose sanctions on a particular product provider to maintain the cost of that item to consumers at a reasonable level (Lim & Yurukoglu, 2018). A public interest justification exists if the good in issue is either relatively inelastic or essential, meaning no replacements. Legal monopoly or, more precisely, natural monopoly: when a single company can best convey the supply.
Societies may determine that monopolies are preferable to competition in some areas because of what economists call “natural monopolies,” or “natural monopolies.” One major producer may decrease the average cost per unit of production in a market if there are numerous smaller manufacturers (Monast, 2019). Electric power generation is an excellent illustration of this. Engineered limits mean that a 10-megawatt power station can generate electricity for a far cheaper per-unit cost than a 1-megawatt power station can today. A natural monopoly occurs when a single, low-cost manufacturer dominates an entire industry. A natural monopoly presents a thorny issue for policymakers. As a general rule, everyone is pleased that the new, larger plant is more environmentally friendly and consumes less fuel. But since it has wiped out all competition, consumers fear that the new monopoly would raise prices and produce less than the socially optimum production level.
The railway is another example of a government-sanctioned monopoly that benefits society. Since new partners or privately-owned companies aren’t authorized to operate train lines under their control, they are effectively a monopolist. Although the cost of the tickets is fair, public transportation is accessible to most people. Google is another example of a good monopoly (Bilolyubskiy, 2016). Whenever we don’t know the solution to a question, we turn to Google. More than 70% of the market is controlled by the most popular online search engine, which uses a secret algorithm. Like the maps, Gmail, and the search engine, the Company has developed into a network of services connected to one other. The Company has retreated from its rivals.
Lastly, social media is another example of a good monopoly. Today’s companies make money from advertising on social media platforms like Facebook and Twitter, which provide free services to users. Facebook has a virtual monopoly on this market thanks to its enormous stake (Bilolyubskiy, 2016). Organic user growth and acquisitions of other firms like Whatsapp and Oculus Rift have helped the Company outpace its rivals Google+, Twitter, and Facebook. The Company is so large that it has lately been accused of influencing users’ views on how elections are fought and encouraging them to vote for a particular candidate or party.
To conclude, there indeed exists a variety of good monopolies. These monopolies include natural monopolies and government sanction monopolies such as patents, railways, social media, google, and electrical power. To ensure that they do not take advantage of this and charge their clients high prices for their products and services, governments keep an eye on them. Companies’ monopolistic pricing is monitored by appropriate legislation. To safeguard consumers against the unscrupulous practices of monopolistic companies, governments have enacted anti-trust legislation.
Monast, J. J. (2019). Electricity Competition and the Public Good: Rethinking Markets and Monopolies. U. Colo. L. Rev., 90, 667.
Bilolyubskiy, S. (2016). Monopolies and oligopolies.
Lim, C. S., & Yurukoglu, A. (2018). Dynamic natural monopoly regulation: Time inconsistency, moral hazard, and political environments. Journal of Political Economy, 126(1), 263-312.
Meghani, Z. (2021). Regulations Matter: Epistemic Monopoly, Domination, Patents, and the Public Interest. Philosophy & Technology, 34(4), 1449-1474.