Last week in class, we were presented with a photo, and asked to come up with questions that came to mind when we saw it. The photo was of three large manufacturers, three businesses, and consumers that wanted to buy specific products. This all eventually lead to describing and discussing how a market operated. As we all know, a market by definition, is a place that brings buyers and sellers together to exchange goods and services which establishes a price for the goods or services.
When it comes to different businesses, there are five categories that include: sole proprietorship, partnership, corporations, co-ooperatives, and government enterprises.
Sole proprietorship is when there is one sole owner, a partnership is when there are 2 or more owners, corporations are separate legal entities that have less individual accountability, co-operatives are where groups of "volunteers" work together for a mutual and agreed upon reason, and lastly, government enterprises are legal entities created by the government.
These are all different types of business that are what make up a market. But, the markets are classified according to the number of buyers and sellers that there are. Different types of markets include: Monopoly, Oligopoly, Perfect competition, Monopolistic competition, or a combination.
I'd now like to introduce to you to a Monopoly market that we are all involved in. That being, Manitoba Hydro. A monopoly market by definition, is when a specific person or enterprise is the only supplier of a typical commodity. This is to prevent firms from entering a market that has a single supplier. Monopolies can then use their power and abuse it by charging high prices. Manitoba Hydro is the primary enterprise that provides the entire province of Manitoba with the services of anything having to do with hydro. They have the power to control high/low price levels, put up supply constraints, or add excessive barriers to entry. Since there is only one supplier in this type of market, consumers are forced and really have no choice but to purchase from them. If there weren't proper rules and legislation, these types of firms would possess all the power to raise prices without affecting the demand for its products/services. In monopolistic markets, goods and services that are provided are ones that are differentiated from the rest of their competitors, whether it may just be a small difference, if this firm is capable of making consumers believe that is what makes it the better product, they have more control of what they can charge.
Manitoba Hydro is the primary supplier for all things hydro in Manitoba. There are no competitors, and for that they can really charge us what ever price they'd like for their goods and services. But since there are rules and regulations, there are restrictions as to what they can charge us.
In conclusion, you can see that monopolistic markets do have their faults, because it restricts competition, and we, as society are left with very little choice as to where we want to purchase our goods or services.
Monopoly
http://www.investopedia.com/terms/m/monopolymarket.asp
