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How can technology affect a monopoly ?

A monopoly exists when one corporation controls all aspects of a certain market. This might be an entire market segment, a particular item or service, or both. The company may raise prices or reduce product quality without fear of losing customers to a competitor. (In Monopoly, for instance, you win by forcing your opponents into bankruptcy by acquiring a majority of the game’s properties and then collecting rent from them.) Even if there are laws in place to prevent firms from becoming monopolies, there are situations in which such a position is appropriate. Utilities, for instance, are monopolies because it makes no economic sense for many companies to provide a given area with electricity and water. Monopolies are often regulated when specific conditions exist.

EXAMPLE

Patents are granted by governments to pharmaceutical companies so that no other companies may produce their medication. Due to the company’s newly acquired technological monopoly, it will soon be able to recoup the money it spent on research and development.

However, patients are often required to pay exorbitant prices for these drugs. When a medicinal company’s patent expires, generic versions of the drug flood the market and drive down prices for consumers.

In a monopoly market, one business has the sole supply of a good or service due to a combination of factors including government backing and ownership of resources, protection against infringement of intellectual property rights such as copyright and patents, and high entry hurdles. All of the aforementioned factors work together to make joining the market less appealing to potential new rivals.

When a corporation has complete control over certain manufacturing processes or exclusive ownership of critical technologies that are indispensable to the production of a good, that firm is said to have a technical monopoly. That is something that can’t be replicated by rivals. Pharmaceutical corporations are an excellent illustration of this.

The capacity of the courts to resolve complex technical tradeoff issues would be significantly enhanced if the current judge had the flexibility to retain as a clerk an expert with the required specialised knowledge. When Microsoft attempted to challenge Judge Jackson’s selection in 1998, he was unable to do so. The solution must be attainable via the exercise of judicial ingenuity, despite the fact that it can be difficult.

The dominating firms have accumulated far more monopolistic power than is necessary to drive and sustain the most rapid and favourable rate of technological innovation, if the conditions outlined below are any clue. Seven of the most important products that led to antitrust cases were all developed by firms other than the final monopoly or by smaller businesses that only subsequently became dominant. The electric light, the telephone, and the computer were among the early technologies that were created simultaneously yet independently by a variety of diverse sources. Once one corporation gained dominance in a brand-new technology field, it often displayed steadfast opposition to change. Market leaders in several of these cases delayed to make useful advances until a rival threatened to overtake them, a behaviour known as “fast second.” According to the economic literature, established firms are most driven to innovate when they are up against new rivals and the threat of falling behind (Schumpeter’s “creative destruction”). 121

In light of this, policy may need to be refocused. Reduce entry barriers for innovative new entrants as a solution to high-tech monopolisation scenarios when it is unclear who should be given the benefit of the doubt. This shows scepticism towards monopolies that have been maintained by the accumulation of in-house patents for longer than the 20 years allowed by existing patent law, even in situations where monopoly was the inevitable outcome of major invention rather than other exclusionary practises. 122 The phrase “for limited Times” in Article I, Section 8 of the United States Constitution must be taken seriously in order to advance science and technology. Since sufficiently conservative judges are unlikely to change the law in this way without Congressional instruction, legislation should be introduced to ensure the viability of U.S. industrial technology in a world where more severe technological challenges are offered from outside.

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