Problem

Monopolies


Experimental visualization of narrower problems
Other Names:
Captive markets
Duopoly
Nature:

Monopolies are large economic associations, such as cartels, syndicates, trusts, or concerns, which are owned by individuals, groups, or shareholders and which control industries, markets, or entire economies through a high concentration of capital and production. Their aim is to deny other producers the opportunity to compete. Their domination of the economy is the basis for their influence on all spheres of life. A monopoly may be granted by the state for certain purposes or may be acquired through the normal processes of business competition. In present day economics, a monopoly is presumed to exist when one firm has one third of the market, but the situation is considered to be more serious if three or four big firms have over half the market.

Background:

The increase in the amount and concentration of capital necessary for the formation of a monopoly was in part assured by greater centralization through the merger of independent companies. In the USA the first great wave of monopoly mergers occurred in the 1890's and early 20th century, when giant companies were formed bringing entire industries under their control, such as metallurgy, the petroleum industry, and the auto industry. The second great wave of monopoly mergers in the USA came on the eve of the 1929-33 depression, when monopolies were formed in the aluminium, glass, and other industries. Other forms of monopolization developed in the European capitalist countries, notably, syndicates and cartels. Cartels were also created internationally as a form of international monopoly.

After World War II new forms of monopoly association arose: the conglomerates, which became particularly widespread in the USA. The conglomerates brought together the most diverse industries, having no production connection and not even linked by common raw material or marketing conditions. The formation of conglomerates resulted from the increased concentration in the mid-20th century of scientific research and management. In the conglomerates, capital can flow from one branch to another, bypassing the traditional capital market.

Broader Problems:
Economic dictatorship
Values:
Monopoly
Related UN Sustainable Development Goals:
GOAL 10: Reduced Inequality
Problem Type:
C: Cross-sectoral problems
Date of last update
11.08.2020 – 19:35 CEST