big bussinesses and capitalism

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One of the problems I see with capitalism is big business there are so many bussinesses being bought ought or owned by companies like pepsi or coke. Is this supposed to be capitalist or is this just an indirect consequence.

Last edited by matsuiny2004 on 14 Apr 2008, 8:08 am, edited 2 times in total.

What exactly is wrong with monopolies?

Historically, and today true market monopolies do not exist. The economic argument is monopolies reduce quantity and increase price; however, every company that you would call a monopoly has done the reverse. Rockefeller's Standard Oil, Microsoft, Coca-Cola, Ford, all of these companies have lowered price and increased quantity sold. You could call them a monopoly because of their huge market share, but that does not make them one by the economist's definition, nor are consumers harmed by this. State sponsored monopoly is a different thing entirely (so I assume we are excluding those), but if a company rises on its own in capitalism to dominance, then there is no problem for anyone.

so the elimination of corporate competition in a ceratin area does not matter?

Well, you can't really eliminate competition outside of government prohibitions on competition. Even if one firm grows to dominate the market, it will still face the risk of new firms rising up to compete with it. If a particular company is able to secure a huge market share, it's because that company serves the market very well. Without government interference, monopolies would only rarely exist, and those that would exist would have to serve a market function to remain viable.

why si there nobody competing with coke or pepsi?

Are the two not competing with each other?

In the soda market? There is some competition, such as between coke and pepsi, and then there is Dr. Pepper, and there are the knock off cheap sodas that try to undercut the big boys. Heck, given that any soft-drink is substitutable by many other soft-drinks and that soft-drinks can even have substitutes of other drinkable liquids, I don't see this as a major problem.

Last edited by Awesomelyglorious on 13 Apr 2008, 8:23 pm, edited 1 time in total.

they are eally the same product are they not?

No, they provide slightly different products but products that are often substitutable for the other. As well, if we have only 2 different companies, that isn't monopoly but rather oligopoly.

Some would disagree with this assessment. I personally don't consume either product, so I could not tell you. As AG has noted, there are several other companies in the soda market. You still have failed to answer my initial question. Is monopoly necessarily bad? Why is it bad that there are two very large soda companies? Anyways, to say there is no competition because the product is uniform across existing companies seems rather naive, and you would have to reject the economic definition of "perfect competition" as not really being competition at all.

On wikiepdia it does say an oligopoly can become a monopoly

http://en.wikipedia.org/wiki/Oligopoly#Examples

1. Wikipedia may not be the best source for economics.
2. I couldn't find the statement you claim they made. Where does it say an oligopoly can become a monopoly? And what is wrong with either of those market situations?

on wikiepdia it says that competition according to economics is supposed to promote innovation.

http://en.wikipedia.org/wiki/Competitio ... onomics%29

I think it is the second paragraph in the description section.

Actually, it refers there to cartels, which in reality aren't usually sustainable without government support.