'Dominant Position of a Company\r'

' correspond to the European argument case law, a prevalent congeal is defined as â€Å"the military unit of a dissipated to be get down to an appreciable extent individually of its competitors, customers and con center of attentioners”. It is obvious that a firm or approximately(prenominal) firms which hold a preponderating station locoweed determine value, the amount of production, supply and this is because these firms push aside puzzle out on an individual basis of their competitors and customers.As a result, superior go down tolerate lead to the securities industry power and in this internet site a firm or several firms permit an major power to individually contrive a well-favoured enamour on the price and total step produced which could result to the securities industry failure. But does this definition make an economic sense and how it should be interpreted in monopoly and oligopoly? Firstly, we need to discover exactly the actual nitty-gri tty of a dominant vista.It is a situation when a firm has an energy to behave independently of its competitors, customers and at last the final consumer. A well known exemplar of monopolistic dominance is Microsoft’s grocery in PC operating systems. In monopoly some members in a commercialize dejection gain food foodstuff power allowing them to stop other important gains from trades and this ignore make the allocation of recourses inefficient due to broken tense competition. As going back to my example, Microsoft illegally employ its market power by bundling its sack up browser with its operating system.In political economy, market power is the mogul of a firm to independently determine the market price and the production of a good or a service, of course, in perfectly competitory markets †market power vanishes. From this example we actually see that Microsoft has an ability to make a biggish influence on the price or other outcomes in the market by usi ng its dominant bearing because that variety of a firm can raise price, outcomes without pitiful of losing its customers.On the other hand, not only one firm can hold a dominant position, further alike a dominant position can be held among several firms and this is called oligopolistic dominance. For example: in 2008 Verizon, AT&T, Sprint, Nextel and T-Mobile together controlled approximately 89 % of the United States cellular phone market. In this situation sometimes firms can decide to make some secret agreements in battle array, for example, to raise prices of cellular phones leading to the profit maximization, erudite that they still are not going to sustain their costumers.Of course, there is opinion that oligopoly is better than monopoly, because oligopolistic dominance (several firms who have a dominant position) could help to stabilize rickety markets, for example dominant firms could set some mixed bag of prices which could help other producers to survive in the veritable market and this is called a price leadership, however the benefit of economics in oligopoly is not easy to dismember and to determine if it is going to have a overbearing reaction.Furthermore, now we know that the definition of dominant position makes an economic sense, because when a firm has a power to behave independently and can make a big influence on the welfare of the economics (prices, total quantity produced, efficiency in allocating the resources), market power and later market failure could occur. We besides know that a market failure is a situation when the allocation of recourses is inefficient due to imperfect competition when not all sellers and buyers can be satisfied.In order to pr regular(a)t market failure, each political science imposes some policies such as subsidies, taxes, minimum wage, some price controls, however sometimes happens that these policies also hold inefficiency in allocating the recourses and it is called government failure. G oing back to the airplane pilot topic, dominant position is not an exception.According to the European competition case law, dominant positions are not veto but in order for firms not to shout out that position they have a special indebtedness: dominant firms must not allow their strategical decisions to make a negative influence on competition in the market, in other words, dominant firms cannot intentionally prevent or eliminate competition. Moreover, in order to determine the definition of dominant position in monopoly, at first we need to understand the basic aspects of it.Monopoly is a situation when a indisputable agent is the only one who supplies a particular proposition good, of course, it is obvious that this market has a lack of economic competition. In monopoly a company has a often bigger profit than it could expect in competitive market, because that only firm regulates all the prices and services for that accepted good. As a result, it can raise the price and maximize its profit without worrying of losing its customers. So, the dominant position in monopoly is a market with a individual agent which has a power to operate independently and has an ability to make a big influence on the prices and production.Finally, to do the same in oligopoly we also need to understand the basic aspects of it. Oligopoly is the market fortune of several firms which together make a big influence to the price or other outcomes of a certain market, however the difference between monopoly and oligopoly is that in oligopoly firms do not operate independently, because then they could retreat some of their customers to their competitors. That is why several dominant firms unceasingly try to cooperate together and sometimes they even make some secret agreements in order to maximize their profits.So, the dominant position in oligopoly is the market share of several dominant firms who have an ability to make big influence on the prices and production. To sum up, we actually see that a dominant position can be defined variously in different areas but still all definitions get out have the same meaning: a dominant position creates a market power which demonstrate to the inefficiency of allocating the resources in economic markets and sometimes leading to the market failure, but in some cases dominant position is the key of stabilizing unstable markets.\r\n'