What causes market monopoly Essay Example | Topics and Well Written Essays - 2500 words

What causes market monopoly - Essay warningThis is a normal behavior because it works. In general, the government regulation that helps create monopoly conditions falls into one of one-third categories Barriers to Labor. Licensing or other regulation impeding the mobility of labor. Barriers to Resources. Examples include natural resources, wireless spectrum. Barriers to Operations. Examples include casino gambling, vile drug trade. The stated purpose of the lawmaking is always to protect the public, but interested parties usually hold open the legislation to suit their own agenda. In many an(prenominal) cases, the legislation that purported to protect the public actually harms the public. An exemplification is barbers. Why does a barber require a freedom to break up hair, and why does the license to cut hair require a lengthy period in a beaut college? The answer is that the legislation is purely to protect the markets of existing barbers. During hard times, setting up a pr ivate barbershop or beauty salon is not rough for anyone with some skill, which presents competition to the existing barbers and beauticians. The clip-joint owners went to the state legislature and worked out a deal. It was in the public interest to cut the deal because the state is always worried about taxes and mortal who receives cash for cutting hair in a private shop may forget to get their taxes on the income. Likewise, the clip-joint owners wanted to make sure it was difficult to get into this business, but not so difficult that the labor supply dries up. They wanted limited competition in good times and high barriers to accession in bad times. The solution was to require a license and make the requirements of getting a license be a three to six month course at a beauty college. This is an deterrent example of barriers to entrance into the labor markets, which we shall discuss. Barriers to Labor Markets As illustrated by the story about the barbershop protection societi es, many opposite groups have formed protective links. The public face of the protective association is always to ensure conformism to the highest ethical standards, but the real agenda is always ensuring that their turf is staked out and defended. We shall say now, we have neer seen a protective association of theoretical physicists. We have never heard specious claims of how the public mustiness be protected from all that high-powered thinking and the only solution is to license and regulate them. by chance the reason is that not many people atomic number 18 capable of becoming a theoretical physicist. Realtors, however, are a different story. Like barbers and the business of cutting hair, if the market looks good and a person has sales talent, real estate looks good. Especially if that person is a connector who collects contacts and likes to stay in touch with many different people. Realtors are just as intelligent as barbers and they formed a protective association that has been very successful in placing a very high barrier to entry into that field. The barrier to entry is so high in many areas that it hurts the public. We shall explain After the realtors protective association persuade the state legislature to pass appropriate legislation and license the realtors subject to an industry oversight batting order with regulatory powers granted by the legislature, along came the Multi Listing Service (MLS). Now that everyone was a member of the union, the whim was to make it easier for everyone to share pieces of the pie. Few understand this, but it hurts consumers because a disincentive has been created there is no