Introduction
It has been acknowledged that competition is the primary instrument and ground of progress. Monopolies, in their turn, are regarded as the entities that prevent any growth due to their negative effects on competition in certain areas of the economy. Governmental monopolies are often allowed in many countries, but these are usually a limited number of industries and segments of the economy (Room and Cisneros Örnberg 224).
Monopolies are seen as publicly permissible when it comes to infrastructure, commodities, or some products that can be hazardous (such as alcohol, cannabis, and others). In the rest of the spheres of the economy, monopolies are regarded as destroyers of the free market, but making monopolies illegal can hardly make markets more effective due to several reasons (Armentano 5). Instead of merely banning monopolies, it is important to ensure the use of effective antitrust law that would facilitate competition and growth.
Why Is Monopoly Ban Ineffective?
In order to understand whether monopolies should be made illegal, it is necessary to identify what this phenomenon is. A monopoly can be referred to as a company that is a single provider of some products or services in certain markets (Daniels 84). Monopolies are usually huge companies that tend to dictate pricing, distribution, and other aspects related to product sales. However, by banning such companies, such technologically advanced countries as the USA risk losing entrepreneurial zeal in the sphere of technology.
Many digital companies have become monopolies because they remain the only providers of highly technological and unique products and services (Stucke and Ezrachi). Facebook or Google became monopolies because no companies can offer competitive products so far. Hence, by abolishing the very existence of monopolies, the American government can drive many entrepreneurs from the USA that can lose its economic competitiveness in the global market.
Moreover, businesses can try to develop strategies and models that would hide their monopolistic position. The division of branches, making them seem independent business entities, can be one of the approaches that have been utilized in other countries (Daniels 85). At the same time, these companies can continue their malpractice that would deteriorate competition and lead to complete monopolization of the sector. In that case, the quality of products would decline, and prices would rise. Therefore, the prohibition of monopolies is an ineffective strategy that can hardly prevent the monopolization of different segments of the market.
Anti-Monopoly Legislation: The Dawn
As far back as the late nineteenth century, Americans made a wise choice and did not ban monopolies. At that, the situation was almost uncontrollable in some of the most sensitive industries as monopolies tried to influence the operations of smaller companies in the industry, companies in related industries, and even governmental bodies (Stucke and Ezrachi). Instead, the US government developed a number of anti-trust policies that imposed quite strict regulations leading to the normalization of the economic situation. In simple terms, the government did not ban monopolies, so companies could grow and turn into multinationals. However, various policies imposed restrictions on activities that could lead to the monopolization of a sector of the economy and limit competition.
This approach has experienced some fluctuations in terms of the degree of restrictions and the overall public attitude towards the matter. For instance, these regulations were not as strict during the period of the Great Depression or other considerable economic issues as large companies and entrepreneurial zeal were rightfully seen as drivers of the economy (Stucke and Ezrachi). The golden age of antitrust laws lasted till the 1970s, and it may account for the stability in the U. S. economy.
However, since the 1970s, anti-monopoly laws have been applied rarely, which led to the rise of some multinationals and companies that tried to monopolize the market to a different extent. The rise of monopolies in modern times is an illustration of the ineffectiveness of this approach (Stucke and Ezrachi). It is critical to ensure the implementation of regulations and proper supervision of companies’ activities if they threaten competition and the development of marketing.
What Exactly Should Be Done?
Centuries of observations of monopolies and their activities suggest that three major approaches exist. These three models include the unrestricted operations of monopolies, robust anti-trust legislation, and the inappropriate use of anti-monopoly legislation. As mentioned above, only one of them was associated with economic growth and stability. The emergence of monopolies is often a natural cause of the development of markets at different stages of their development. Nevertheless, these companies’ activities and operations have to be regulated when they limit or can potentially restrict competition.
In order to illustrate the possible ways to address the issue, it is necessary to consider the latest examples of monopolies. These companies are the representatives of the digital industry, such as Facebook and Google. The companies emerged as natural monopolists as their products and services were unique for a long period of time (Smith). However, these multinationals are now accused of monopolistic practices aimed at diminishing competition in the market. These companies implement acquisitions and make agreements with other leading digital leaders, which deprives smaller businesses of competitive advantages forcing them out of or blocking their entrance into the market (Smith). The two companies try to prove in court that they do business fairly and do not try to reduce competition in the industry.
The current cases show a certain vulnerability of the existing anti-trust legislation, especially when it comes to industries where businesses can affect or even form, to a considerable extent, public opinion. Nevertheless, the legal decisions made in the golden age of anti-trust legislation can provide numerous valuable lessons to ensure the use of proper policies and the development of new ones. Transparency and clarity, as well as publicity, are three pillars for the future of anti-monopoly laws. Legislators should develop clear regulations that would ensure the facilitation of competition. New startups and entrants should receive support from the government. It is also critical to provide detailed information regarding monopolistic activities of companies to inform people who can make decisions regarding products and services to consume.
Conclusion
To sum up, it is necessary to stress that the mere ban of monopolies per se is counterproductive as it can, ironically, reduce competition and discourage companies from growing or remaining transparent and responsible. In some industries, especially during some stages of their development, monopolies are inevitable due to the uniqueness of some products and services. Therefore, instead of trying to prevent the emergence of monopolies, it is more effective to regulate their activities and prevent their attempts to diminish competitiveness in the associated markets. The U. S. economy displayed high results when such regulations existed and were implemented properly, so the return to this approach will be beneficial for the country’s further sustainable growth.
Works Cited
Armentano, Dominick T. “Barriers to Entry.” Abolition of Antitrust, edited by Gary Hull, Routledge, 2017, pp. 3-16.
Daniels, Eric. “Reversing Course: American Attitudes About Monopolies, 1607-1890.” Abolition of Antitrust, edited by Gary Hull, Routledge, 2017, pp. 63-94.
Room, Robin, and Jenny Cisneros Örnberg. “Government Monopoly as an Instrument for Public Health and Welfare: Lessons for Cannabis from Experience with Alcohol Monopolies.”. International Journal of Drug Policy, vol. 74, 2019, pp. 223-228.
Smith, Kelly Anne. “The Rise, Fall, and Rebirth of the U.S. Antitrust Movement.” Forbes, 2021. Web.
Stucke, Maurice E., and Ariel Ezrachi. “What You Need to Know About the Facebook Antitrust Lawsuit.” Harvard Business Review. 2017. Web.