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· 30 Jan 2022

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Why is Monopoly Bad

Business and competition go hand in hand. Whether it’s a new business or a well-established renowned group of companies, every business has to face competition. A monopoly is a market situation in which a company or business group is the sole provider of the service or product. But monopolies are not so good and ideal in the long term. Many business critics are against the practice of monopoly. Here let us understand what is monopoly and why is monopoly bad?

What is a monopoly?
If a particular company or business firm is the sole provider for a service or product then it is called a monopoly. Monopoly means that there is no other competing company or business organization and a single business entity is enjoying the status of being the only product or service provider in a particular market. The company is so much powerful that no other company can match its standards and it is practically impossible for any company to enter into that service or sell that product.

Why monopoly is bad?
Monopoly may be very beneficial for the company enjoying its advantages. They are exempted from all competitions going in the business world. The reason behind it is that since they are the only provider of that service there is no competition for them. But from the consumer’s and critic’s point of view, there are some serious ill effects of monopoly. Some of them are:
1. No check on price rate: Companies who practice monopoly have an unfair benefit of gaining extra profit. Being the only provider in the market they get an unethical opportunity to sell their products at any rate. And they do it fearlessly because they know that consumers who need their product or service will buy it at any cost. After all, there is no other option available for them. Knowing this fact the company impose high prices on the product and gain a huge profit.
2. Product quality is not maintained: Since there is no competition in the market for the monopoly company they at times compromise with the quality of the product or service. The compromise with the quality is unintentional sometimes but intentional most of the time. They do it fearlessly because they know that ultimately their product will be sold.
3. No innovation: Competition in business is the prime reason for innovation. But since for a company in monopoly, there is no competition they do not find a need for product innovation. Because there is no other alternative to their product so the company does not find it necessary to give a new variation to their users.
From the above reasons, we can understand that monopoly may be very beneficial for the practicing company but for consumers, it is definitely not. In such circumstances, consumers are adversely affected since they don’t have choice, pay higher prices and at times feel exploited as well. Moreover, even after paying a big amount, they do not get the quality and freshness in the product.
Thus, it can be said that the practice of monopoly is not good in the business world. The government should have a certain set of laws to keep a check on companies practicing monopolies.

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