Essay: Monopolistic Hold of a Firm

Sample Essay

A firm is generally considered to be in possession of a monopolistic hold when it has abilities to provide consumers with a service at a certain level of quality and price at which other suppliers cannot provide the consumers. In cases of monopoly, there is generally an individual firm that establishes itself in a manner such that other firms fail to compete with the earlier firm to surpass the standards of the same (George, Joll & Lynk, 1992).

It is for the same reason that a firm in monopoly commonly has a sufficient degree of dominance over the market and is capable of leading the industry in the direction that it desires. Usually in the case of a monopoly, the firm in possession of the monopolistic authority seeks to increase the degree of hold that the firm has on the industry while smaller firms continue to make attempts at acquiring the monopolistic firm’s market share. In cases such as these, the monopolistic firm has to channel significant resources towards the maintenance of the edge that it has over its competition in order to ensure that the smaller firms to do not manage to acquire their goal of achieving development rates similar to that of the firm in monopolistic control (Stewart, Warner & Portman, 2008). This edge can be from any number of factors. For instance, one firm may hold a monopoly in the industry simply because of a certain technology that the firm is making use of in the production process that is allowing the firm to manufacture products at cheap costs and then sell them in a manner such that a share of the savings are transferred to the clients. Or a monopoly may exist because an individual producer has access to the resources that are required to produce a certain commodity.

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