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Article Reviews: Price and Output Determination in Monopoly Market and Power of Monopoly Market
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Article Reviews: Price and Output Determination in Monopoly Market and Power of Monopoly Market
Article #1: Sun, B., Jing, W., Zhao, X., & He, Y. (2017). Research on market power and market structure. International Journal of Crowd Science.
Purpose of the article
This paper had the main purpose of looking at if the internet structural monopoly has ensured the production of market power. It looked at the welfare changes that are occurring in the internet industry.
Theoretical foundation
The NEIO model comprises two methods which include building a measurement model by the use of cost function, level of competition and the forces in the market. Secondly, there is the use of production methods where there is the elimination of all factors determining productivity. In this context, the rate of growth will be dependent on market power.
Methodology
Through employing the use of empirical industrial organization methods, and using E-commerce, for instance, the writers of this article determined the power of the market as well as economies of scale for organizations offering internet services.
Results
The internet has been a vital part of the economy of scale but it has lacked the market power. As a result, the sector still has high competition levels. The rise of big companies has been known to improve consumer’s welfare significantly.
Conclusion
In conclusion, this paper provided that there is a high level of competition in the internet industry, and thus, there is a need for new kinds of regulations to prevent the Marshall Conflict.
Creative insight
An increase in monopoly has been known to cause welfare losses, which is a big concern for the economic community. Thus, it is important to carry out research to determine the anti-trust practices that can boost market power.
Article #2: Cowan, S. (2018). Regulating monopoly price discrimination. Journal of Regulatory Economics, 54(1), 1-13.
Purpose of the article
The purpose of this article is to assess the impacts of getting a uniform profit margin other than monopoly pricing.
Theoretical foundation
This article employs the use of general theoretical analysis in determining what will occur when one firm decides to set a similar profit margin in each of their markets. Also, the comparison between uniform price-cost ratio and the uniform margin was carried.
Methodology
During this analysis, the authors used convexity relationships and the effect of profit maximization.
Results
It was determined that when uniform price cost ration and uniform margin are similar, the same results will be yielded. As a result, there must be cost variation for there to be a difference.
Conclusion
Simple forms of regulation of monopoly have provided a clear result to consumers and social welfare in several situations. There is a lot of similarities between uniform margin and uniform-price cost ratio.
Creative insight
There is a need to carry further studies to determine ways that could be used in increasing consumer surplus and an increase in profits in organizations.