badmathkid
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Can anyone list any advantages of colluding?
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Mathematising
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In a monopoly there is only one firm so collusion is neither necessary nor possible.
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badmathkid
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(Original post by Mathematising)
In a monopoly there is only one firm so collusion is neither necessary nor possible.
So I'm guessing it would be wrong for me to write in my essay that a monopoly is not harmful to markets because colluding happens? I don't know what else to write. It's my last point and I'm out of ideas. I'm not that great with economics.
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Have you ever played the monopoly board game? Those who collude always win.

But in reality, only oligopolies can collude
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Mathematising
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I'm not sure it really makes sense - you could say that monopolies aren't much worse than oligopolies (where there are only a few sellers) because in an oligopoly the firms collude and become almost a monopoly as a result? You're going to struggle to find a lot of ways in which a monopoly isn't harmful to markets - you could say that it allows companies to grow larger and benefit from economies of scale (increasing productive efficiency as average costs fall).
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badmathkid
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(Original post by Mathematising)
I'm not sure it really makes sense - you could say that monopolies aren't much worse than oligopolies (where there are only a few sellers) because in an oligopoly the firms collude and become almost a monopoly as a result? You're going to struggle to find a lot of ways in which a monopoly isn't harmful to markets - you could say that it allows companies to grow larger and benefit from economies of scale (increasing productive efficiency as average costs fall).
Thanks so much! In your opinion, do you think that a monopoly can be harmful to markets? I don't know if I should agree with the statement or diagree for my conclusion.
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badmathkid
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(Original post by Zxyn)
Have you ever played the monopoly board game? Those who collude always win.

But in reality, only oligopolies can collude
That's a good example! I never thought of it like that. Thanks!
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Mathematising
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(Original post by badmathkid)
Thanks so much! In your opinion, do you think that a monopoly can be harmful to markets? I don't know if I should agree with the statement or diagree for my conclusion.
No worries

If the question is just whether a monopoly *can* be harmful then you'll find it much easier to argue that it can.
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badmathkid
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(Original post by Mathematising)
No worries

If the question is just whether a monopoly *can* be harmful then you'll find it much easier to argue that it can.
Well this is the questions:

"To what extent do you agree that a monopoly is seen to be harmful to markets?"

I was told to write 3 positives and 3 negatives. I've written 3 negatives so far and 2 positives and need one more positive. I'm not sure how to write my conclusion as I was told to put the best point in the conclusion but I read somewhere that you should not introduce any new ideas in a conclusion. Any advice on that? Sorry for all the questions, this is my first essay.
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Mathematising
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I'd agree you shouldn't be introducing new things in your conclusion but you should elaborate on something which you think in particular gives one side of the argument an advantage over the other.
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badmathkid
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(Original post by Mathematising)
I'd agree you shouldn't be introducing new things in your conclusion but you should elaborate on something which you think in particular gives one side of the argument an advantage over the other.
I'll try that out. Thank you so much!
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Mathematising
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No problem! Now quit working on Christmas Day!
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badmathkid
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(Original post by Mathematising)
No problem! Now quit working on Christmas Day!
Haha, of course! I'll start again tomorrow.
Thanks again!
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ns_2
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Note that, in accordance with the laws of the UK, a company is said to have 'monopoly' power when their market share exceeds 25% - so, technically, you could talk about collusion between monopolies - but would have to clarify that you are not referring to 'true' or natural monopolies - rather ones as defined in law.
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badmathkid
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(Original post by ns_2)
Note that, in accordance with the laws of the UK, a company is said to have 'monopoly' power when their market share exceeds 25% - so, technically, you could talk about collusion between monopolies - but would have to clarify that you are not referring to 'true' or natural monopolies - rather ones as defined in law.
So in monopoly power, there is collusion. I've been told that collusion reduces existing competition and makes them a stronger monopoly. But a bad thing about collusion is that consumers are being exploited and reduces their welfare. But it allows them to make supernormal profits. Is this okay to write for a positive?
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ns_2
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(Original post by badmathkid)
So in monopoly power, there is collusion. I've been told that collusion reduces existing competition and makes them a stronger monopoly. But a bad thing about collusion is that consumers are being exploited and reduces their welfare. But it allows them to make supernormal profits. Is this okay to write for a positive?
It is an old example but still works - http://news.bbc.co.uk/1/hi/business/7132108.stm

"Supermarket firms Sainsbury's and Asda have admitted that they were part of a dairy price-fixing group that earned about £270m extra from shoppers. The supermarkets, along with a number of dairy firms, have agreed to pay fines totalling some £116m after an Office of Fair Trading (OFT) probe.Cases against Tesco and Morrisons will continue after no deal was struck. The OFT said that in-store prices went up after the collusion, but the amount received by farmers did not increase.However, the firms insist that the farm gate price paid for milk did rise and that they were not ripping off customers.
The OFT said the collusion saw customers being charged 3 pence extra for a pint of milk, 15p extra per quarter-pound of butter and 15p per half-pound of cheese, the watchdog said."

Collusion between monopolies creates a de facto stronger, more influential monopoly - that can more strongly manipulate suppliers as detailed in the above article.
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badmathkid
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(Original post by ns_2)
It is an old example but still works - http://news.bbc.co.uk/1/hi/business/7132108.stm

"Supermarket firms Sainsbury's and Asda have admitted that they were part of a dairy price-fixing group that earned about £270m extra from shoppers. The supermarkets, along with a number of dairy firms, have agreed to pay fines totalling some £116m after an Office of Fair Trading (OFT) probe.Cases against Tesco and Morrisons will continue after no deal was struck. The OFT said that in-store prices went up after the collusion, but the amount received by farmers did not increase.However, the firms insist that the farm gate price paid for milk did rise and that they were not ripping off customers.
The OFT said the collusion saw customers being charged 3 pence extra for a pint of milk, 15p extra per quarter-pound of butter and 15p per half-pound of cheese, the watchdog said."

Collusion between monopolies creates a de facto stronger, more influential monopoly - that can more strongly manipulate suppliers as detailed in the above article.
I like it, I'll use that example in there if that's alright. Thank you!
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ns_2
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(Original post by badmathkid)
I like it, I'll use that example in there if that's alright. Thank you!
No problem, and Merry Christmas.
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That Bearded Man
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Could collude in the sense of a business colluding with a supply/transport company to ramp up prices and push out other suppliers/businesses.
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badmathkid
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(Original post by ns_2)
No problem, and Merry Christmas.
You too.
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