s monopoly a good example of competitive free enterprise

Any proposed corporate merger must first meet their approval, and those that would stifle competition and create an unfair market environment will likely be rejected. Regulatory bodies such as The Federal Trade Commission (FTC) and the Department of Justice (DOJ) are in charge of enforcing federal antitrust laws and help promote free trade. Though some markets are much less competitive than others, true monopolies are rare. Obviously, such a scenario is usually highly unfavorable for consumers, as it gives them no recourse to seek alternatives that might force prices lower. In the absence of any competition, the lone seller is free to keep prices artificially high, without fear of being undercut by another provider. However, in a monopolistic environment, a single company or provider has absolute control over the supply that is released into the market, giving that particular provider the ability to dictate prices. Buyers and sellers both exert an influence over prices, and this eventually results in a state of equilibrium. In a free enterprise system, prices are largely determined by the competing market forces of supply and demand. High barriers to dissuade the entry of any potential competitors.

How Does a Monopoly Work?įor a true monopoly to be in effect, each of the following characteristics would typically be evident:Ī sole provider of a viable product or service.Ī lack of any close substitutes for consumers to choose from. A monopoly is a market environment where there is only one provider of a certain economic good or service.

S monopoly a good example of competitive free enterprise