Monopolies — Good or Bad?

Abstract

Market (or monopoly) power is generally condemned by neoclassical economists on the grounds that it leads to a misuse of resources and a reduction in economic welfare. Such concerns have led to the establishment of bodies (for instance, the Monopolies and Mergers Commission in the UK) whose aim is to identify the presence of market power, and then to regulate or to eliminate any monopoly abuse. The task of such bodies is by no means straightforward. Market power is not always easily identified. Moreover, economists have different views on the factors giving rise to market power and disagree over the circumstances in which monopolies operate against the public interest.