Some Advantages and Disadvantages of Monopoly are as follows. So let us check it out some information of advantages and disadvantages to know more about monopoly.
Advantages of Monopoly are:
- Monopoly makes lots of profit hence it can be used to encourages Research and Development (R&D).
- Economic of scale can be gained and consumer may get benefit of it.
- Monopoly encourages innovation.
- Competiton for corporate control.
- Abnormal profits in long term can be seen in monopoly of products or services.
- There is possibility of price discrimination during monopoly.
- Monopoly avoids undesirable duplication of products or services.
- New technologies that may reduce cost of monopoly can be made by competitors.
- A firm or company can enjoy the power of monopoly.
- Profit gained by monopoly can be used for investment.
- There is no competiton in market as there is only one single seller of particular product or services.
Disadvantages of Monopoly are:
- Prices and costs of products or services may increase any time due to monopoly.
- Power and wealth.
- Costly functions.
- Potential of supply to be limited - less choice.
- Poor level of service is observed dur to lack of competiton which may lead to low quality and outdated products or services.
- Potential for inefficiency due to lack of competition.
- Monopoly may restrict the quantity of goods they supply in order to keep prices of product high to earn more profit.
- Exploitation of consumers or customers and they are charged high prices for low quality of products.
- Buying problems can be observed in monopoly.
- Monopoly may reduce the satisfaction of the customers.
- Sometimes monopolies may product low quality product as there is no competitor to produce better quality product.
- Monopolies may not invest their money and time in developing new products because they can sell their existing products without any competition.