Stefan K. OPINION: Facebook is a social media outlet designed to make money on user traffic and attention--stimulating democracy is not part of the business model. But censoring freedom of speech, may well be.
A full 90 percent of all the data in the world has been generated over the last two years. The internet companies are awash with data that can be grouped and utilised. Is this a good thing? We might be irritated by the surveillance cameras in the local supermarket but tolerate the way our phones track our every move. Maintaining the right of privacy cannot be relegated to the individual or turned into a personal responsibility, according to Swedish researchers.
An optical illusion leads us to think that products that are more brightly coloured are bigger, or have more space than the same products with more muted colours. Researchers tested this idea with coloured coffee cups, suitcases and furniture in shades of red, orange and purple. Customers can be nudged into choosing environmentally friendly alternatives when shopping online. Read about new methods for managing stress in working life. Two researchers tell the story of how the pandemic completely altered their research topic and how they dealt with it.
In principle, there is nothing wrong with a company rising up to the level of a monopoly. So long as the industry remains competitive and is not protected. Photo: Shutterstock. August - The economy is top on the list of public debate. Unfortunately, economic theory is not.
The price we pay to use services like Facebook is our personal data. The size of Standard Oil allowed it to undertake projects that disparate companies could never agree on. In that sense, it was as beneficial as state-regulated utilities for developing the U. The profits of Standard Oil and the generous dividends also encouraged investors, and thereby the market, to invest in monopolistic firms, providing them with the funds to grow larger.
It is clear that when a monopoly can provide an organized service by delivering a quality product consistently at a reasonable price—particularly when startup costs can be astronomical for new companies—then it is worth allowing the monopoly to exist, as long as the government is able to regulate the monopoly in some manner to protect consumers. Andrew Carnegie went a long way in creating a monopoly in the steel industry when J.
Morgan bought his steel company and melded it into U. A monstrous corporation approaching the size of Standard Oil, U. Steel actually did very little with the resources in its grasp, which can point to the limitations of having only one owner with a single vision. The corporation survived its court battle with the Sherman Act and went on to lobby the government for protective tariffs to help it compete internationally, but it grew very little.
Eventually, U. Steel stagnated in innovation as smaller companies ate more and more of its market share. In response, the Clayton Act was introduced in Among these were interlocking directorships, tie-in sales, and certain mergers and acquisitions if they substantially lessened the competition in a market. This was followed by a succession of other acts demanding that businesses consult the government before any large mergers or acquisitions took place. Monopolies tend to arise at a point in history when new products or services become dominant within society, such as oil, telephone service, computer software, and now, social media.
Although these innovations did give businesses a slightly clearer picture of what not to do, they did little to curb the randomness of antitrust action. Major League Baseball even found itself under investigation in the s, but it escaped by claiming to be a sport rather than a business and thus not classified as interstate commerce. The last great American monopolies were created a century apart, and one lasted over a century.
Others were very short-lived or still continue operating today. T , a government-supported monopoly, was a public utility that would have to be considered a coercive monopoly. Microsoft Corp. MSFT , on the other hand, was never actually broken up even though it lost its case. The case against it was centered on whether Microsoft was abusing its position as essentially a noncoercive monopoly.
Just as U. A noncoercive monopoly only exists as long as brand loyalty and consumer apathy keep people from searching for a better alternative. Even now, the Microsoft monopoly is looking chipped at the edges as rival operating systems are gaining ground and rival software, particularly open-source software, is threatening the bundle business model upon which Microsoft was built.
In the world today, technology companies are the new powerful companies, none so much as Facebook FB , which many consider to be a modern-day monopoly. In December , the Federal Trade Commission FTC sued Facebook, claiming that it is maintaining its social networking monopoly via anticompetitive conduct. The FTC claims that Facebook has done this through its acquisitions of Instagram and WhatsApp, two of the largest social media networks, as well as through imposing anticompetitive conditions on software developers.
That is a significant amount of control regarding how data is shared, how advertising is conducted, and the fact that consumers have very little in terms of other options to use. The FTC has called for a breakup of Facebook through the divestiture of WhatsApp and Instagram, but whether or not the government is able to break up Facebook remains to be seen. Federal and local governments regulate these industries to protect the consumer.
Companies are allowed to set prices to recoup their costs and a reasonable profit. PayPal co-founder Peter Thiel advocates the benefits of a creative monopoly. That's a company that is "so good at what it does that no other firm can offer a close substitute. Monopolies restrict free trade and prevent the free market from setting prices. That creates the following four adverse effects.
Since monopolies are lone providers, they can set any price they choose. That's called price-fixing. They can do this regardless of demand because they know consumers have no choice. It's especially true when there is inelastic demand for goods and services. That's when people don't have a lot of flexibility about the price at which they will purchase the product.
Gasoline is an example—if you need to drive a car, you probably can't wait until you like the price of gas to fill up your tank. Not only can monopolies raise prices, but they also can supply inferior products. If a grocery store knows that poor residents in the neighborhood have few alternatives, the store may be less concerned with quality.
Monopolies lose any incentive to innovate or provide "new and improved" products. That was true of cable companies until satellite dishes and online streaming services disrupted their hold on the market. Monopolies create inflation. Since they can set any prices they want, they will raise costs for consumers to increase profit. This is called cost-push inflation. Federal Trade Commission. Encyclopedia Britannica. Department of Justice. StatCounter Global Stats. Bureau of Labor Statistics.
Imperfect competition : This graph shows the short run equilibrium for a monopoly. The gray box illustrates the abnormal profit, although the firm could easily be losing money.
A monopoly is an imperfect market that restricts the output in an attempt to maximize its profits. In economics, deadweight loss is a loss of economic efficiency that occurs when equilibrium for a good or service is not Pareto optimal.
When a good or service is not Pareto optimal, the economic efficiency is not at equilibrium. As a result, when resources are allocated, it is impossible to make any one individual better off without making at least one person worse off.
When deadweight loss occurs, there is a loss in economic surplus within the market. Deadweight loss implies that the market is unable to naturally clear. Deadweight loss is the result of a market that is unable to naturally clear, and is an indication, therefore, of market inefficiency. The supply and demand of a good or service are not at equilibrium. Causes of deadweight loss include:. The deadweight loss equals the change in price multiplied by the change in quantity demanded.
This equation is used to determine the cause of inefficiency within a market.
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