Welcome to Monopoly

 

A Monopoly must be distinguished from monopsony, in which there is only one buyer of a product or service; a monopoly may also have monopsony control of a sector of a market. Likewise, a monopoly should be distinguished from a cartel (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies, monophonies and oligopolies are all situations where one or a few of the entities have market power and therefore must interact with their customers (monopoly), suppliers (monopsony) and the other firms (oligopoly) in a game theoretic manner - meaning that expectations about their behavior affects other players' choice of strategy and vice versa. This is to be contrasted with the model of perfect competition where firms are price takers and do not have market power. Monopolists typically produce fewer goods and sell them at a higher price than under perfect competition, resulting in abnormal and sustained profit. (See also Bertrand, Cournot or Stackelberg equilibrium, market power, market share, market concentration, Monopoly profit, and industrial economics).

Monopolies can form naturally or through vertical or horizontal mergers. A monopoly is said to be coercive when the monopoly firm actively prohibits competitors from entering the field or punishes competitors who do.

In many jurisdictions, competition laws place specific restrictions on monopolies. Holding a dominant position or a monopoly in the market is not illegal in itself, however certain categories of behavior can, when a business is dominant, be considered abusive and therefore be met with legal sanctions. A government-granted monopoly or legal monopoly, by contrast, is sanctioned by the state, often to provide an incentive to invest in a risky venture or enrich a domestic interest group. Patents, copyright, and trademarks are all examples of government granted and enforced monopolies. The government may also reserve the venture for itself, thus forming a government monopoly.

monopoly cartoon

Sunday, April 26, 2009 7:27 AM Posted by Someone

The explaination of the cartoon

Another cartoon relating to Monopoly! It is funny how the current state of the economy can be tied to the board game. If you think about it, the US economy IS the Monopoly board game. Most of the banks owns the houses and hotels (commercial property) and we (the middle class) have our money going back to these bankers with mortgages and loans. It is safe to say that most people are a slave to the big banks. This works beautifully for the bankers. Under our current economic system, the bankers are set up to keep their high salary executive position with stock options and big bonuses while the middle class suffer with high taxes and unemployment. This system is perfect for the bankers because the losses is “socialized” and the gains is “privatized.”

Take a look around! The bailouts and stimulus was created to socialized the banks' loss with higher taxes. How does that work? Every dollar printed by the Federal Reserve is issued as debt. The bailout goes to the banks to prevent bankruptcies. The banks invested those billion dollar bailout in US Treasury since it is a “riskless” investment and they make record profit with the interest payment coming from the bonds. The bailouts are financed by the US taxpayers and since the US government do not have enough money to pay back the bailout money to the Federal Reserve , the politicians will increase tax to pay back the debt. Meanwhile, the bankers will get their millions dollar bonuses and stock options.

This is why the gap between the rich and poor become wider every year . The system reward the riches on Wall Street and punishes ordinary Americans on Main Street. The Main Street Americans need to wake up!