Question

One of the drawbacks of monopoly may be discouraging fairness in market competition. Let's focus on the health care industry; let me direct your attention to the following:

The pharmaceutical industry seems to be a single monopolistic company relative to medications. Given this fact, can we state that there is no any competition in the market concerning medications? Or if there would be some kind of competition, how would you explain that? When you provide your explanation, you can compare with other industries. Please use your own experience and style.

Answer 1

There is competition. The reason is that even though different brands produce same drug they have to compete with each other and there is product differentiation and thus competition. Even otherwise generic drugs from low cost countries give fair amount of competition. For monopoly there must be single producer of a commodity having no close substitutes. Here there are more producers and more close substitutes. In contrast nuclear power plants are maintained only by state. It is monopolist since there is single seller and no close substitutes