Q. Under monopoly, the barriers to the entry and exit of firms lead to absence of completion in the market. Do you think that this is necessary in certain strategic areas ? Explain using example
Dear student,
In certain strategic areas (such as railways) monopoly proves to be more beneficial. This can be understood with the help of the following points:
1. Monopolies can benefit from the economies of scale.
2. Sometimes the strategies of price discrimination can be used in favor of the economically weaker section.
3. It would avoid duplication, thereby, reduces wastages of resources.
In certain strategic areas (such as railways) monopoly proves to be more beneficial. This can be understood with the help of the following points:
1. Monopolies can benefit from the economies of scale.
2. Sometimes the strategies of price discrimination can be used in favor of the economically weaker section.
3. It would avoid duplication, thereby, reduces wastages of resources.