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Why Monopolies Are Unfair For Small Businesses

When most think of a monopoly, they think of a man with a mustache wearing a nice top hat. This, however, isn’t the only form of monopoly consumers should think about. That’s because monopolies come in many forms that can threaten both new and small businesses alike.

Giant companies like Amazon, and Apple have very little competition, and if they continue to dominate their respective industries by continuously offering new features, they could easily become monopolies. The Apple Corporation, in particular, has enjoyed plenty of success the past few decades. With the design of the Apple Watches, iPod, iPhones, and now being close to 1 trillion dollars; their products are expected to perform at high speeds, last forever, and never break beyond repair. Monopoly companies rely on mergers and patents to obtain industry dominance, especially when it comes to technology. If this is left unchecked or unregulated, dominant organizations can not only negatively affect small businesses but also consumers and, most importantly, the economy. The reality is, if companies like Amazon are left unchecked, they’ll continue to eliminate competition, which could mean bad news for consumers and small business owners.

Supply and Demand

According to Ohio University, nearly 25 percent of the world’s population owns and uses a smartphone, which is why these devices are the leading platform for mobile payments. It’s also why giant companies like Amazon lower their prices to the most critical point, knocking off any competition that comes their way. In fact, since organizations like Amazon are in a league all by themselves, they can generate their own prices for products that are in high demand.

As a sole provider, a company can refuse to sell their merchandise to consumers. They can also refuse to sell their products to retailers as well. If a giant company refuses to sell their important merchandise to a smaller organization, it can potentially shut that business down. On the other hand, if the supplier sells to consumers only, they can refuse to market to certain areas that experience lower-income levels, even if they have an online presence. While the smartphones make it easier to purchase items online, the reality is, companies can still pick and choose who they market to. If specific regions are ignored, then communities with nearby businesses could perish.

Economic Chain Reaction

Although some people may believe a monopoly structure is beneficial to the economy — because the business in question may continue to fund research and development — the truth is, companies that have high profitability may also have no ambition to make improvements. Why? Well, because consumers will still rely on their products and services. In comparison, organizations that thrive in a competitive market do so by competing and making changes to already existing products. This might include offering more bundles, lowering prices, or giving customers a percentage off every time they shop in your store.

When a monopoly structure is involved, however, these marketing approaches go out the window. This means that once a price is set, there’s no changing it. Therefore, consumers either pay the price or look for something else within their price range. The economy isn’t the only thing that jeopardized in the long run. That’s because the labor force may also be at risk in a monopolized industry.

So, what can be done to fix this problem?

It’s safe to say that fixing this problem won’t be an overnight thing. One of the easiest ways to address this problem head-on is by dismantling the monopoly power structure a whole, which can only be down by policymakers. That said, policymakers can either split monopoly companies or divide their bundled products and services into smaller ones so they can’t overpower smaller organizations. By dividing companies, policymakers will also make it easier for new organizations to enter the business industry, which will ultimately provide consumers with a wide variety of options when it comes to shopping.

Competition in the marketing industry continues to rise as more and more companies turn to mobile technology, and the more options customers have, the better. In a dynamic world, this is the best way to allow businesses to develop and thrive over time.

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Herman Davis
Herman Davis
Herman Davis loves taking advantage of the sunny weather outside. If you can’t catch him online, you might be able to catch him out playing football with friends or cheering on the Denver Broncos. Follow him on Twitter below.

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