Question

Name four different near-monopolies (one firm sells 70% or more of entire market sales) in the U.S. economy. Do not include utility companies since they are natural monopolies. (2-4 sentences)

2. How do monopolies contribute to –

A) the U.S. economy’s income inequality? (3-5 sentences)

B) preventing new business startups and more competition? (3-5 sentences).

Answer 1

Part 1:

Google: the internet search engine holds 70% market share.

Microsoft: the software company holds 75% market share.

AB InBev: the beer company holds more than 70% market share.

Luxottica: the sunglass company holds 80% market share.

Part 2:

A: Monopolies increase income inequality, since firms are restricted to do business there or can’t increase their market share. This makes rich becomes richer and poor becomes poorer. The richest 0.1% families of the country hold as much wealth that becomes equal to 90% of lowest poor families.

B: Monopolies prevent others to do business in the same platform, and in this way it reduces competition in the market. Since most of the shares are held by the monopolies, very few customers are left for other businesses. The increase in stack actually increases power of those monopolies where no other competitors can alive.