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Do Monopolies Exist?

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Week Three Assignment: Do Monopolies Exist?
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Ashford University
Eco 100
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Week Three Assignment: Do Monopolies Exist? To answer the question of the existence of monopolies does not require an extensive discovery process. A simple flick of the light switch on the way out to mail a letter should be enough evidence to convince an otherwise skeptical public of the existence of monopolies. A monopoly is established when the barriers of entry into its market is sufficient to block out its competitors and when the price elasticity of demand is such that the firm can charge as much or as little as possible to its customers. Though it is true that “all firms compete for consumer dollars” (Brue and Flynn, 2010, pg. 237), all firms are not created equal. A monopoly’s customers will give the firm their money regardless as long as the firm keeps its potential competitors at arms-length.
If you wish to send a first-class letter, there is no other viable option other than the United States Postal Service (USPS). This is because the barrier of entry into this market strong enough to block all other firms. The USPS has competitors in the parcel delivery service; UPS, DHL, and FedEx to name a few. However, none of those firms can compete with the price of sending a letter (currently $.45) to anywhere in the United States. Of course, if the postal service were to significantly raise the postage rate competition would surely ensue.
The same case can be made concerning the monopoly that is enjoyed by electricity companies in municipalities across the country. Electricity is a necessity for most people. Thus, the price is less elastic than other non-essential goods like fashionable clothing or cigarettes. The great need for electricity incentivizes the electric company to serve as many people as possible at the optimum—not necessarily…...

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