Monopoly vs Monopolistic Competition

and Standard Oil Co. are some of the best examples of companies that controlled more than 80% of their industries in their days. However, until recently when the world has witnessed tremendous development in information technology, there were few companies who could match the dominance of American Telephone and Standard Oil. Currently, according to the text, a new crop of companies has emerged as a result of the technology boom and their sizes have grown to previously unimaginable levels. These companies namely Amazon, Microsoft, Apple, Facebook, and Google control an average of 90% in their respective markets. Although the US government has yet to take any action against these tech giants, the challenge remains on how to specifically define their practices and dominance.

Some quarters are quick to label the companies as monopolies and have made numerous efforts to call for the splitting of the companies or tightening legislations considering their huge market share according to the author. However, the characteristics of the companies and the industries show otherwise. Ideally, a monopoly market is identified by having only a single player whereby the demand is relatively inelastic, huge entry barriers, the services offered are mostly inefficient despite excess profits and the single player sets the price which is normally increasing. However, when analyzing the tech industry, the market has numerous players, the demand is elastic, they report excess profits, the companies are increasingly lowering their prices and their services are highly efficient (Mankiw and Taylor, 2007).