When the word monopoly is spoken most immediately think of the board game made by Parker Brothers in which each player attempts to purchase all of the property and utilities that are available on the board and drive other players into bankruptcy. Clearly the association between the board game and the definition of the term are literal. The term monopoly is defined as "exclusive control of a commodity or service in a particular market, or a control that makes possible the manipulation of prices" (Dictionary.com, 2008). Monopolies were quite common in the early days when businesses had no guidelines whatsoever. When the U.S. Supreme Court stepped into break up the Standard Oil business in the late 1800’s and enacted the Sherman Antitrust Act of 1890 (Wikipedia 2001), it set forth precedent for many cases to be brought up against it for years to come.
Such as the case of two major players in the entertainment community of Sirius and XM who both have a majority of the marketplace in the satellite radio business and their talks of consolidating both businesses into one. This article on Ars Technica (Lasar, 2008) expands on the idea that these corporate entities should not be allowed to merge into one corporation, but above that should also be fined for even considering the idea in back rooms and locked boardrooms. Using the model case of the Sherman Anti-Trust act in Standard Oil, the corporation floated around having anywhere between eighty five percent and ninety five percent. With those numbers, XM and Sirius would fall into the numerical category of filling that condition of a monopoly.
Since this debate still rages on, many people argue both sides of the story of the pros and cons. Many would argue that not breaking up monopolies actually increase the competition of companies that are attempting to break into some of the market share that the monopoly already has, more so than the free market that exists now. Proponents of the Sherman Anti-Trust act argue that “absolute power corrupts absolutely” (Martin, 1996) as originally quoted by Baron Acton. The idea that no competition within the business world establishes no risk and reward that is all part of the entrepreneur spirit of the U.S. spirit.
The U.S. constitution and the Sherman Anti-Trust act has very little to do with laws but more so to eliminate the concept of no competition. If the merger between XM and Sirius was approved, it would be allowing two large corporate entities that have already established a large portion of the customer base within their field of expertise.
Unfortunately, these monopolies allowed companies to raise prices without consequence, as there was no other source of product for consumers to buy for cheaper. The more competition, the more a company is forced to appeal to the consumer, but monopolies allowed corporations to treat consumers awfully and still receive their business. Trusts were bad for both the consumers and the workers, but without proper representation, they could do nothing. However, with petitions, citizens got the first anti-trust law passed by the not entirely corrupt Congress, called the Sherman Act of 1890. It prevented companies from trade cooperation of any kind, whether good or bad. Most corporate lawyers were able to find loopholes in the law, and it was largely ineffective. Over time, the Sherman Anti-Trust Act of 1890, and the previously passed Interstate Commerce Act of 1887, which regulated railroad rates, grew more slightly effective, but it would take more to cripple powerful
...tually break up monopolies when they formed, by specific legislation” (600). They see that the government is letting the business tycoons to own whatever land they want and extend their fortunes. Unlike the first two books, Johnson’s book discussed the history of the book without bias and from a different perception; one that was not came from an American view.
I am interested in how corporate and finance laws are implemented and how much government is involved in business. This case involves with monopolies in the motion pictures industry. As learned in APUSH, the motion pictures industry was extremely popular during the twentieth century and there was a lot of news surrounding that area of American life. I had originally had chosen the court case Gibbons v. Ogden (1824), which also had to do with monopolies, but there wasn’t any antitrust laws during that time period to research. That was the first time monopolies were challenged in court. Over a hundred years later, the monopoly of the movie production industry was challenged through the same idea of antitrust. The topic of monopolies and trusts even plays an important role in society today as it shapes government regul...
The Clayton Act that was passed just 34 years later in 1914 does not have criminal penalties such as the Sherman Act. This act will not allow for a merger to happen that will diminish the competition of a produ...
American business is protected by pro-competition legislation, including antitrust laws that were enacted to prohibit monopolies. As noted in the Sherman Antitrust Act of 1890, it is illegal for companies to hold a large concentration of economic power. AT&T is no stranger to manipulating this federal law in order to gain an unfair advantage, according to the Federal Communications Commission. During the 1980’s, AT&T made a name for itself by practically dominating its industry, an unfair competitive advantage that contradicts its Code of Ethics. However, the company’s ...
During the nineteenth and twentieth century monopolizing corporations reigned over territories, natural resources, and material goods. They dominated banks, railroads, factories, mills, steel, and politics. With companies and industrial giants like Andrew Carnegies’ Steel Company, John D. Rockefeller’s Standard Oil Company and J.P. Morgan in which he reigned over banks and financing. Carnegie and Rockefeller both used vertical integration meaning they owned everything from the natural resources (mines/oil rigs), transportation of those goods (railroads), making of those goods (factories/mills), and the selling of those goods (stores). This ultimately led to monopolizing of corporations. Although provided vast amount of jobs and goods, also provided ba...
As a result of the FCC auction, the only XM’s competitor in satellite radio arena is SIRIUS. But at the same time there other entertainment sources that could be perceived as prospective competitors for XM.
By law a monopoly is not allowed to exist in the US. It has been long debated whether Microsoft is a monopoly or not? Among other charges Microsoft was charged with "monopolizing the computer operating system market, integrating the Internet Explorer web browser into the operating system in an attempt to eliminate competition from Netscape, and using its market power to form anticompetitive agreements with producers of related goods" (SWLearning).
A monopoly is an industry in which there is only one organisation that supplies a particular good, service or resource which has no other similar alternatives. Monopolies are created by barriers which restrict the entry of new organisations (McTaggart et al, 1999). In a perfect monopoly, the seller has total control over the quantity of goods or services available for sale and the price at which the items are sold (Butterworths Business .. Dictionary, 1997). De Beers Consolidated Mines Central Selling Organisation has had a monopoly on the selling of rough diamonds since the 1930’s.
I find this case of importance due to the fact it was once a large merger many people doubted advantageous, however it has become a market with vast options and competitive pricing affordable to the consumer. At the closing of the stock exchange on April 9th 2017, AT&T clocked in at $40.59 while one of its current largest competitors Verizon beat it at $48.66. This intrinsic value measure goes to show other competition since has arisen and the original ruling seems to have been fair. Verizon also sits one position ahead as 5th most valued brand of 2016. History proves this wasn’t always true. I seek to evaluate the United States original claim of a horizontal merger and further provide support to why the ruling under such stipulations was condemned beneficial to the
Monopolies are when there is only one provider of a specific good, which has no alternatives. Monopolies can be either natural or artificial. Some of the natural monopolies a town will see are business such as utilities or for cities like Clarksville with only one, hospitals. With only one hospital and there not being another one for a two hour drive, Clarksville’s hospital has a monopoly on emergency care, because there is not another option for this type of service in the area. Artificial monopolies are created using a variety of means from allowing others to enter the market. Artificial monopolies are generally rare or absent because of anti-trust laws that were designed to prevent this in legitimate businesses. However, while these two are the ends of the spectrum, the majority of businesses wil...
One of the oldest complaints against monopoly is that a monopolist will annex a competitive market by using the monopoly profits from his other markets to subsidize a price that his competitors cannot meet because it is below cost. An economy of scale is only one purpose behind the presence of monopolies. Monopolies likewise exist in view of sole access to some asset or innovation and due to the utilization of non-market intend to wipe out rivalry, including purchasing up rivals etc. Once a solitary firm winds up plainly settled in an industry that is described by natural monopoly, it is extremely troublesome for rivals to develop on account of the high expenses for
The merger was a brilliant idea, because companies themselves were struggling to stay afloat. Due to poor regulations of the Federal Communication Commission, the process for the merger took 17 months. There were basic demands from the commission that required a percentage of channels for minorities and other public interest. One of the agreements between the two companies was to keep the brands operating separately, so that they could make sure they fulfilled obligations that were already in place. The two brands are available in all vehicles, and depending on the vehicle will determine which one you will receive. The pricing of the two brands are also different, and currently they will not combine the two. Even though there was a merger of Sirius Satellite Radio and XM Satellite Radio, there are currently three radios (XM, Sirius, and SiriusXM). All of them offer a diversity of channels, but the platforms and prices are different. Howard Stern was also part of the merger promise, but there were a lot of issues and concerns from him about the censorships. Due to this setback the company’s stock took a turn for the worst. The reason I know is because in 7/2005, I purchased 280 shares of SIRIUS SATELLITE RADIO INC (SIRI), which I still own
Firms with market power or monopolies are often seen as detrimental for customers and economic welfare. According to the neoclassical theory, the market power of monopolies and oligopolies is potentially higher than that of firms in monopolistic or perfect competition since they have to face very limited competition, if any (Ferguson and Ferguson 1994). In monopolistic or perfect competition can make supernormal profits in the short term but eventually other firms will enter the market and offer alternative products that reduce the demand for the established firm’s products (Sloman et al., 2013 p. 177). Dissimilarly, this is not the case for dominant firms or monopolies; the lack of competition allows them to set prices and make supernormal profits increasing the perception that big companies are “bad” for consumers. As shown by the graphs in Figure 1 and 2, there are substantial differences in the competitive and monopoly markets. In a competitive environment, the equilibrium is reached where demand meets supply. In a monopolistic market, thanks to the establishment of higher prices and the production of lower quantities, monopolies or dominant firms make supernormal profits; additionally, there is a deadweight loss and some consumers who were willing to pay lower prices wil...
Well the bottom line is that a monopoly is firm that sells almost all the goods or services in a select market. Therefore, without regulations, a company would be able to manipulate the price of their products, because of a lack of competition (Principle of Microeconomics, 2016). Furthermore, if a single company controls the entire market, then there are numerous barriers to entry that discourage competition from entering into it. To truly understand the hold a monopoly firm has on the market; compare the demand curves between a Perfect Competitor and Monopolist firm in Figure