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Do you think a company that grows to be a monopoly deserves to engage in unethical monopoly practices?
Do you think a company that grows to be a monopoly deserves to engage in unethical monopoly practices?
Expert Solution
A market system which becomes nurturing for a single firm, such that the firm grows into a monopoly, does not provide a green signal to the newly evolved monopolist firm to exploit the market with unethical trade practices at the same time.
There are very few producers/suppliers which grow into a monopoly that is possible only through acquiring economies of scale by providing a superior product or service. If the market provided a level playing field to all the agents operating in the market which proved to be beneficial for the single firm that grew into a monopoly, it should also be noted that the monopolist should not harm the competition and prevent others from reaping the benefits of the market as it did. This is from an ethical point of view.
Coming to what's optimal for the business, a rational producer-supplier driven by the profit motive can definitely adopt trade practices which are harmful for competition. It can use its market power to create barriers for entry and can subject the existing firms to predatory pricing in order to drive them out of the market. The practices are not only unethical but also illegal as per the antitrust laws of the United States of America which are established to regulate the conduct of the corporations in the market and to protect the competition for the welfare of the consumers.
If a company has grown into a monopoly by reaping the fruits that the market provided and is able to enjoy dominance over the market, it doesn't deserve to prevent others from the same opportunities.
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