Monopoly †economics Essay

?I consider the case of Qualcomm faces antitrust probe in china. Qualcomm Incorporated is an American global fabless semiconductor company that designs, manufactures and markets digital wireless telecommunications products and services. In the article it states that Qualcomm is the world’s biggest makers of cellar phone chips so they wanted to merge companies with china due to the potential market growth china has compared to the United States. So the speculation of this deal is that the company in china and qualcomm plan to do a launch of TD-LTE by early 2014. This causing an issue simply because it seems as though they broke the antitrust violations; in the article it does not say what violation it is but my thought from reading it would be the Celler-Kefauver Act which states that the Clayton Act, Section 7, which prohibits a firm from merging with a competing firm (and thereby lessening competition) by acquiring its stock. The issue seems to the rise of a company in which other companies would suffer from the merge taking down competitions and so forth. From the article we can tell that with any company trying to succeed in the business world especially a company that makes cellphone chips comes into a merger with china then the production and economic profits is unimaginable. China is one of the world’s leading productions in products worldwide now combing that with the cell phone chip makers, no other company would dare go against them or even try to keep with the company. The Marginal Revenue or Marginal Cost will skyrocket in competition. If the merger occurs it would call a Deadweight Loss to Society meaning that the costs to society created by market inefficiency and loss occur when supply and demand are not in equilibrium. Did not formally state why the company was being investigated but some say it is because of an attempt to gain leverage in royalty negotiations with Qualcomm ahead of the expected rollout of new 4G wireless infrastructure in 2014. The probe coincides with a recent surge of investigations into large foreign corporations that are currently operating in China, with speculation by market analysts that the move has been instigated to advantage domestic firms as markets shift toward a new generation of wireless technology. Some Pecuniary associated with the antitrust behavior is: Preparing major move to 4G wireless technology, merging of Qualcomm and china mobile, Asian smartphone makers has also emerged to help meet demand for low end handsets, pushing for local technology suppliers to increase revenue. Some. Nonpecuniary associated with the antitrust behavior is: Chip making for low cost phones Monopolies and oligopolies are not always bad for society. â€Å"A monopoly, as many people know, is a market condition in which only one vendor (usually a large corporation) is in play. There may be other somewhat similar businesses, but a monopoly exists when only one business or individual can provide a product or service. In an oligopoly, the product or service may be available from more than one vendor or merchant, but only a few big players dominate the market and make competition very difficult for new entries in the field. Examples of monopolies are difficult to produce, as federal antitrust regulations prohibit monopolistic market conditions in the United States. Regardless of legal issues, though, monopolies do exist, primarily in the utilities market. Electricity, for example, is generally available from only one â€Å"electric company† in any given market. Water and cable television are equally exclusive. During the 1990s, Microsoft commanded such a large portion of the computer operating system environment, and demonstrated such a propensity to absorb upstart competitors, that it was believed to be a monopoly as well. Examples of oligopolies are considerably more plentiful. The automotive industry, for example, has many competitors but is dominated by General Motors, Ford, Chrysler, Honda, and Toyota. Breakfast cereal is also such an excellent example of oligopoly that it is often used in teaching the concept to Junior Achievement students; while the market is open to many competitors, almost all breakfast cereal — in the United States, at least — is manufactured by General Mills, Post or Kellogg. † An example of industry (where monopoly is warranted and is beneficial for the society) is electricity distribution industry. It is a natural monopoly industry because it involves large fixed costs and there are economies of scale over the entire significant range of output. In such industry, there is huge cost advantage if only one firm is operating but if there is more than one firm, cost will rise and consumers will have bear burden of this increased cost in the form of increased price. So allowing monopoly in such industry may actually benefit the society. Reference Mukherjee, S. , Alawadhi, N. , (2013, November 25) Reuters, Retrieved from http://www. reuters. com/article/2013/11/25/us-qualcomm-china-idUSBRE9AO0E.