Hey there! Sign in to join this conversationNew here? Join for free
x Turn on thread page Beta

Can someone explain this point? watch

Announcements
    • Thread Starter
    Offline

    1
    ReputationRep:
    One of the advantages of monopoly power is:
    "There are few permanent monopolies. Super-normal profits act as an incentive to break down the monopoly through a process of creative destruction ie undermining the monopoly through product development and innovation."
    This is in one of the resource sheets that edexcel has provided for economics but I don't quite get what it means. Can someone explain?
    Offline

    18
    ReputationRep:
    (Original post by TheWrongTrick)
    One of the advantages of monopoly power is:
    "There are few permanent monopolies. Super-normal profits act as an incentive to break down the monopoly through a process of creative destruction ie undermining the monopoly through product development and innovation."
    This is in one of the resource sheets that edexcel has provided for economics but I don't quite get what it means. Can someone explain?
    Hi there,

    creative destruction assumes that some monopolies may not exist in the long-run as small firms can capture some market share by being innovative.

    Think of the computer market.

    IBM was a monopoly, until Apple who (incentivised partly by super-normal profit) destroyed the IBM monopoly by being more innovative.
 
 
 
Reply
Submit reply
Turn on thread page Beta
Updated: January 25, 2015
Poll
Do I go to The Streets tomorrow night?

The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

Write a reply...
Reply
Hide
Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.