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As you have learned, monopolies have market power because there are barriers to entry
As you have learned, monopolies have market power because there are barriers to entry. This enables monopolies to charge a higher price and restrict quantity compared to what would occur in a perfectly competitive market. Around the world and over time, we have seen monopolies occur...DeBeers and diamonds, the railroads, standard oil to name a few. As technology changes and the market place evolves there are new firms that may be exhibiting monopoly-like market power. The European Union has taken the lead on addressing these concerns. At the time of putting together this discussion post together, the United States Federal Trade Commission and Justice Department are investigating some of the big US tech firms due to these concerns.
Instructions
With this in mind, please answer the following questions:
- Is Facebook a monopoly? Or a natural monopoly? Why or why not?
- Who benefits and who is harmed if Facebook is a monopoly or natural monopoly?
- What are the ways to address the concerns about Facebook's market power? Does this type of intervention work? Why or why not?
- What do you think should be done, if anything, about the market power Facebook has?
- Please discuss other tech firms that you think may be a monopoly.
- Post your answer to all of these questions.
- After posting to the discussion, please be sure to comment on what you like about at least two other students’ posts.
Expert Solution
After learning about Monopolies, and Natural Monopolies, I believe that Facebook is a Monopoly. Facebook was intended to be a platform to find old friends and school mates, and has naturally evolved into a huge social media platform that people can use to shop, date, find new friends, find complimentary social groups that fit your lifestyle, and schedule and find events. From creation I do not think this was the intent, it naturally evolved into the most popular social outlet, and the more people use it, the more important it becomes in their daily lives. The most important reason why I consider it a Monopoly is because of the pricing power, and lack of competition.
I think small businesses, dating sites, and craigslist are a few examples of who is harmed by Facebooks monopoly because of the power Facebook has over these smaller companies. When someone goes to sell something, they will use Facebook marketplace versus craigslist now, which takes the business away from Craigslist, and gives it to Facebook.
I don’t believe there is much that can be done to address Facebooks market power, there are too many people that use it on a daily basis, and it has become a daily tool.
Personally, I think Facebook is an addiction, and can be overused. I like to limit the time I spend on Facebook for this reason.
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