Monopolies have been made illegal in the United States as it destroys any chance for competition and creates dependence upon a particular company for goods and services. Throughout the years, monopolies of varying degrees have been attempted and challenged. However, the damage that can be wrought on a global scale is much different than what it would be in a local community. More facets of humanity come into play and could greatly disrupt the way of life for many people.

 Destroying Local Economies

When a country produces a material for an incredibly lower price than local competitors, it may only make sense to purchase those goods in order to save money. Unfortunately, this inadvertently causes unemployment through the destruction of competition. An example of this was seen in recent years as China solar panels were considerably cheaper than others. This caused many manufacturers on a global scale to shut down releasing thousands of employees en masse. The local areas of those manufacturing plants saw an increase in unemployment destabilizing various communities.

 Trade Tariffs and Fees

In order to keep a society from destabilizing, some countries will impose fees on products coming into the country that the purchasing party needs to pay. These fees are intended to increase the overall cost of the purchase in order to reduce the damage from an attempted monopoly through pricing. Instead of purchasing goods overseas, buyers may find it less costly to buy from local markets. Unfortunately, this can be a slippery slope as the trading country can exact import fees as well strangling the supply of needed goods.

Resentment Over Respect

Monopolies can serve to develop resentment for a particular company or country depending on the impact a particular product makes on a global scale. This can begin to sow seeds of violence within any particular society especially if the goods are something that is needed for sustained existence. An example of this would be if only one country was able to supply oil for the rest of the world. By not providing a fair price per barrel or denying shipments entirely, some countries may feel inclined to go to war.

 Promotion of Violence

In the past, it has been witnessed that control of a certain needed product could lead to violent conflicts and war. Holding a monopoly may be unwise as those that require the product could forcibly obtain the goods. This could lead to high levels of fatalities on a global scale should more than one country become involved.

 Restriction of Innovation

By holding a monopoly on certain products, one company can greatly stunt the evolution of technology. Innovation has been the cornerstone of greater efficiency for centuries, and preventing such creations through restrictions made by monopolies could stunt the continued developments of humankind.

Most people rely on a strong global economy for basic survival. What one nation has may be needed by another. However, greed and power often influence business leaders who then make choices without thinking about the repercussions. By spending more time analyzing efficiency and productivity, any business could see more of a profit. Business leaders such as Bob Bratt have made a significant impact on a global scale by thinking outside of the box. In the long run, a monopoly could cost more than just money for a society.

By Kar

Dr. Kar works in the interface of digital transformation and data science. Professionally a professor in one of the top B-Schools of Asia and an alumni of XLRI, he has extensive experience in teaching, training, consultancy and research in reputed institutes. He is a regular contributor of Business Fundas and a frequent author in research platforms. He is widely cited as a researcher. Note: The articles authored in this blog are his personal views and does not reflect that of his affiliations.

%d bloggers like this: