Economics

Markets theory has been in existence for centuries and is basically concerned with the determination of outputs and prices of services and goods as well as the usage and prices of factors employed in production of various services and goods. This theory illustrates the different structures of the market and market strategies that exist in an economy. There are basically two chief markets, these are monopoly and competition. The dispute of which of the two markets is better than the other is one of the major discussions in the field of economics between governments and economists. Monopoly has been described as an individual company that maintains its market under stocked so as to raise demand and hence sells such stocks at prices that are above normal. On the other hand, in competition markets, the individual traders have no significant control over prices they charge to the consumers of their services and goods. In fact, the prices of the services and goods they offer to the market are largely determined by forces of demand and supply.

Monopolies have been considered to be bad as far as the economy is concerned and this is a very correct position. The position is correct because the characteristics of this market usually lead to consumer exploitation by the monopolistic organizations. These characteristics include one major trader selling services and goods to a very large number of buyers who are independent. There are usually no substitutes that are close to the products being offered by the monopolistic supplier and hence the consumers have no alternative but to purchase the products being supplied by the monopolistic supplier. This type of market leads to the creation of barriers by the monopolistic company, and thus no new companies can join the market. Since the monopolistic companies operate on the basis of these characteristics, the position held that they are not ideal market structures is correct since they end controlling the market and can therefore increase the prices of their products and hence exploit the consumers.

Competition markets are better than the monopoly ones because the existence of monopolistic markets is largely as a result of greed emanating from these traders. Due to the fact that they are the only competitors in a market, they are in a position of increasing their wealth drastically by exploiting consumers through unnecessary price increments. This particular behaviour that is usually demonstrated by these traders does not benefit the economy as a whole in the long run. The accumulated wealth as a result of such trade practices enhances the powers of these traders both socially and politically and thus influence most economic decisions in such a manner as to favour them as opposed to the entire economy.

Monopolistic markets lead to increased levels of technical inefficiencies since there no competitors posing any threats to the monopolistic sellers. In a market that is monopolised, the suppliers can comfortably afford being inefficient since they will not incur any costs as a result of their inefficiencies. In such a case, this type of market structure will lead to under exploitation of the available resources within the economy and hence the rate of economic growth and development will be low. Monopolistic markets are worse as compared to the competition markets since they can easily exploit profits through the practice of price discrimination, whereby the monopoly charges dissimilar prices for the same products but to different consumers, and these difference in prices is not as a result of production or transport costs.

There are several indicators showing that monopolistic have the tendency of raising prices and at the same time produce less and therefore will not satisfy growing public interest and economy. Furthermore, they lead to the introduction of unjust strategies of marketing like price discrimination. In addition, with cartels introduction, several of them will and can take advantage of the various markets in the economy. In order to prevent such from taking place, there is dire need to create anti trust laws aimed at combating such practices. Monopolies can effectively be curbed by these laws and thus shield the entire economy from the negative effects of monopolistic markets.

Competition which is the effort of several independent parties acting in order to shield a third partys business by offering the third party favourable terms. In this type of market, the term favourable is of great essence, since it is used to determine the price of the differentiated products being offered in the market. This type of market structure is better than monopolistic one since it is characterised by factors that enhance competition and hence lead to better products being offered to consumers at more favourable terms in respect to price and quality. Some of these characteristics include many buyers and firms with none of them having substantial influence in the market. There is also freedom of exit and entry since there are no exit or entry barriers. There is usually perfect knowledge concerning the market by both the sellers and the buyers and hence none of them can take advantage of the other.

One of the greatest advantages of competition in a market is the existence of several suppliers in the market and therefore cannot be in a position of controlling the price of various services and goods they offer to the market. This therefore means that unlike in the case of monopolistic markets where the sole traders can increase prices as they wish, in this market structure, the consumers are well shielded against any form of exploitation. The presence of several suppliers can be as a result of low entry sunk costs which can attract entrants to join the market and thus make the market to be contestable perfectly.

Since firms operating in a perfect competition are not in a position of controlling the prices of various products they offer to the market, the only way of ensuring that they maximise their profits is by increasing their output at low costs of production. In order for a firm to achieve such, it must acquire technology that is more advanced so as to lower the cost of production and increase production efficiency in the long run. This implies that average cost of producing a product will lower and hence the firm can be in a position of lowering the prices it charges to its customers. Since the products produced in this market structure are homogenous, consumers will be able to buy the cheapest products in the market. This will make the other firms operating in the same market to discover the new improved technology of producing products more efficiently and they will therefore be in a position to compete effectively with the firm that first discovered the technology. This form of competition is not only beneficial to the consumers but also to the firms themselves and the entire economy in which the firms are operating in. The firms will be able to produce more effectively and efficiently and thus lower their costs of production and earn more profits, while the available resources are exploited more effectively by the modern technology and hence the maximum possible value is added to various products and services leading to a higher gross domestic product. Competition in an economy is therefore much better as compared to a case of a market with a single player.

Conclusion
Monopolistic markets are usually associated with several disadvantages that affect the consumers and the entire market adversely in the long run and therefore, where possible, it is advisable to avoid this type of market structure. It leads to consumer exploitation the consumers are charged high prices for products of less quality. At the same time, it results to a slow in economic growth and development since the available resources in an economy are less exploited with less value being added on them. On the other hand, a competitive market is better than a monopolistic one since the consumers are less exploited. They are able to obtain quality products from the market at competitive prices and hence they get real value for their money. In addition, the gross domestic value is greatly enhanced since, the increased competition leads to increased real value of various services and products offered in the market. Therefore, a market in which competition is allowed is better than one without competition.