Sunday, March 27, 2011

A List of 10 de facto Monopolies no one talks about. Should the Government break them up, even though we (mostly) LOVE their products?

As coincidence would have it, in AP Microeconomics we will study Monopolies this week.  Here is a list of 10 companies by market share should be considered monopolies (or oligopolies or monopolistic competitors--a fine line) in their respective markets. These are not your grandparents monopolies, which I would characterize as "hard" industries such as oil, fixed phone service, banking, etc. All these industries employed lots of people and formed the heart of the "middle class" in America.  Now, industry tends to be "soft", literally and figuratively. This list is made up of high-tech firms and no one gets their hands physically dirty in any of them.  It is quite amazing that most on the list have been around less than 20 years. Don't worry, as with all monopolies, someone will come along with a better mousetrap and take them down---Creative Destruction, indeed.     

The New Generation Of American Monopolies

A monopoly is either what the government says it is or what a dominant company’s competitors claim. The government’s opinion is the only one that counts, however, as Sprint will find out as it protests the new AT&T buyout of T-Mobile.

A common definition of a monopoly is when a company has such effective control of its market that it can set prices and stifle innovation by depriving competition of any chance of profit. The offending company only has to continue to do extraordinarily well in its field regardless of what antitrust regulators have to say. 24/7 Wall St. found ten instances that could be considered de facto monopolies though the government will not take action in each case.
1. Product: Search Engine GOOGLE
   Market Share: 90.1%
   Competition: Yahoo!, Bing

2. Product: MicroSoft Windows  
    Market Share: 89.7%
   Competition: Mac OS X, Linux

3. Product: Facebook
    Market Share: 63.8%
    Competition: MySpace, Linked In, Twitter

4. Product: Netflix
    Market Share: 61%
    Competition: Blockbuster, Hulu, Vudu

5. Product: Intel
    Market Share: 80.3%
   Competition: AMD

6. Product: I-PAD
    Market Share: 73%
    Competition: Android, Samsung

7. Product: I-Tunes    Market Share: 70%
   Competition: Amazon.com, Wal-Mart Music Downloads

8. Product: Kindle
    Market Share: 67%
    Competition: Barnes & Noble, Sony

9. Product: Sirrus Radio
    Market Share: 100%
   Competition: None

10. Product: PayPal
      Market Share: N/A
      Competition: Google Checkout, Fiserv, CashEdge

1 comment:

  1. We generally think of monopolies as negative entities, but most of the companies in the list are things that most people use every day and enjoy. If they had to shut down due to an anti-trust law, then many people would be very unhappy.

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