Negative Effects of a Monopoly Essay Example | Topics and Well Written Essays - 500 words

Negative Effects of a Monopoly - Essay Example A monopoly reduces consumers’ purchasing power through the increase in the price of services or products. Being the only provider of service or product, the company in power sets the rate at its own will. An example of that is the Pfizer Company, the maker of the Viagra pill, that charged customers a lot because no other pill could be compared to Viagra in effect. Consumers are thus forced to pay a higher price for a service or product that is not actually worth that price. Such system leads to a decline in the standard of living and wellbeing of the society. A monopoly equips the sole vendor to reduce the quality of service or product. As there is no competitor in the market, the sole provider knows that consumers have no option but to purchase the service or product even with a lower quality. The sole provider does not feel obliged to invest much in the business in terms of resources and accordingly, the end product does not measure up to the required standard of quality. A monopoly creates unemployment. As more and more businesses are driven out of the market because of the power of the sole provider, people employed in those businesses become jobless. They either have to regain skills related to another profession or somehow become part of the sole provider. Either way, these jobless people have to go through a lot of emotional, psychological, and financial problems to achieve their destination. Many people with higher skills, hence, have to work at much lower salaries than what would be justified considering their level of education and skills.