Decreasing Costs

Capital-consuming technologies

Control of an Input Resource

Products which require a natural-resource input may be monopolized if one supplier can get control of all known supplies of the natural resource. For example, at one time all known supplies of nickel were controlled by a single company. Aluminum ore, too, was at one time controlled by a single supplier.

Nowadays many goods are produced on the base of complicated and fun-consuming technologies.Machine-building industries, industrial equipment, automobile, marine vehicles imply large factories with many subsidiaries. Such a large investment are not up to small or medium producers.

Monopolies can come about because there are decreasing costs (increasing returns to scale) in the long run. In such a case, the long run average cost slopes downward, as shown in the picture. In such a case, the largest producer can undersell the rest, and still make a bigger profit. Therefore, in an industry in which there are increasing returns to scale, we would not be surprised to find a monopoly, in the absence of any other causes.

Дата добавления: 2014-01-11