ECO 550 Wk 6, Disc 1
ECO 550 Wk 6, Disc 1
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Date Created: 11/15/15
ECO 550, Week 6 Discussion 1 Monopolies The company that I chose was Facebook. Facebook completely dominants the social internet market. Depending on how you measure, Facebook may account for as much as 95 percent of the time Americans spend using online social networks. A simple reason for the companies' free pass may be that they charge very little or nothing for their services. Facebook's famous pledge "It's free (and always will be)" may help to insulate it from antitrust claims. And indeed, one of economists' primary concerns about dominant firms is that they will gouge consumers, or at least raise prices in a way that pushes some buyers out of the market. But economists also worry that a dominant firm will erect barriers to keep other companies out of its primary market. The lack of competitors hurts consumers, too, by blocking the introduction of new and potentially better products for example, a social networking site that gives users easier control of their content and privacy. Clearly, promising to offer a service for free does not solve this problem. If it finally becomes clear that Facebook's network is so enormous that no other social network can break into the market, then its own business may become a target for regulators. (www.foreignpolicy.com) Since Facebook is free, the competition would also have to enter the market as a free service, which might not be sustainable to some companies. In the second quarter of 2013, Facebook surpassed 1 million users. They have also partnered with Instagram to be able to upload videos and users can now use hashtags to connect with friends who use Twitter. Facebook earns its revenue from advertising and in the second quarter, they earned $1.60 billion. (www.investors.fb.com) At one time, Facebook did have competition with Friendster and Myspace but they quickly faded out. In the longrun, since there has been other competitors and since Facebook is the dominant social network right now, there wouldn’t be anything for them to do different to keep ahead of the game, they have obviously figured out what they need to do and how to do in order to be the monopoly of social networks. Reference: Financial Statements, 2 quarter. (July 24, 2013). Retrieved from http://investor.fb.com/releasedetail.cfm?ReleaseID=780093 Altman, D. (January 7, 2013). The New Monopolies. Retrieved from http://www.foreignpolicy.com/articles/2013/01/07/the_new_monopolies