Question

The social media industry is highly monopolistic with Facebook, users provide Facebook (and 3rd-party companies) with huge amounts of data in exchange for access to the platform. provides Facebook’s algorithms with a clear picture of your preferences or demand for certain goods/services. Technological underperformance is a welfare cost associated with monopolies. For companies such as Facebook, innovation would be minimal due to lack of competition. There are many people argue that government should interfere.

From Industry perspective， could you please give some ideas to argue that the market doesn't work badly and the government should not interfere.(e.g regulations will close the social media market to new entrants due to the increased cost of doing business)

Answer 1

The market which involves competition will produce in a long run. As there market demant = market supply but of the market is under monopoly then monopolist will charge high price from the consumer, monopolist can charge amount according to there desire as there will be no similar product hence no competition in the market. It will reduce the consumer benefits and welfare.

Steps should be taken by the Government:

1 Check on the price

The government must keep an eye on to price of the product. There should be some fix amount according to the product.

2 Check on Quality

Government should always check the quality of the product even after it becomes an establish brand. So that the quality remains the same.

3 Nationalisation

The last step any government can take is nationalisation of the product if the society is not willing to tolerate it.