Please Share the below Post
Rate this post

A monopolist, being as a sole supplier creates some undesirable aspects in the market. Monopoly leads to following disadvantages:

(i) Monopoly leads to concentration of price and output of wealth which is against the spirit of equality in the society.

(ii) The monopoly price of a good is usually higher than that prevailing under competition. The consumer has to pay higher prices for the products.

(iii) Monopoly is an inefficient type of market structure.

(iv) A monopoly firm does not pay more attention to improve the quality of the product as there is no effective threat of the new firms to enter into the industry.

(v) A monopoly firm exploits the workers and pays them less wages.

Advantages:

Here, a question can be asked as to how far is a monopoly price discrimination beneficial to society. The answer is that if a monopolist charges low price for his product from the poor people and higher price from the rich, then certainly we can say that it increases economic welfare.

But if a monopolist dumps his output in a foreign market at a low price and raises the price of his commodity in the home market, then such a monopoly price discrimination is certainly detrimental to society, if the production of certain commodity is subject to law of increasing returns, then price discrimination may be to the advantage of the society.

The monopolist increases the sale of output in order to sell the commodities in the foreign market. The monopolist fixes a low price for his output both for the home market and the foreign market. It is from this point of view only that we say price discrimination is desirable and beneficial.