ARGUMENTS FOR MONOPOLY-
1) Pricing stability. There are no price wars to shake markets when there is no competition. Other companies and end-user customers who do business with a monopolistic company may benefit from price certainty.
2)The ability to grow. Monopolies can result in significant economies of scale. A company with a monopoly on a particular type of product may be able to produce large quantities of that product at lower per-unit costs. Depending on the company's ethics, those low prices may be passed on to the consumer.
3) Research and development budgets. A monopoly that is confident in its market position is more likely to invest in research and development. This may result in new.
ARGUMENTS AGAINST MONOPOLY ARE-
1) Prices are significantly higher than in competitive markets. Monopolies face inelastic demand and can raise prices, leaving consumers with no choice. For example, Microsoft had a monopoly on PC software in the 1980s and charged a high price for Microsoft Office.
2) A decrease in the consumer surplus. Consumer prices rise, and fewer people can afford to buy. This causes allocative inefficiency because the price exceeds the marginal cost.
3) Monopolies are less likely to be efficient. A monopoly can profit without much effort if there is no competition, so it can encourage x-inefficiency (organizational slack) and possible diseconomies of scale. Because it is more difficult to coordinate and communicate in a large firm, it may become inefficient.
4) Monopolies frequently have monopsony power in terms of paying a lower price.