How Greed Can Prevent a Monopoly

1. In a free market, greed prevents monopoly. Explain. A free market prevents a monopoly because it does not allow someone or, some company, to corner the market. There is always someone else that is willing to make or sell a product for the same or lesser price. For instance, in a free market there is not just one phone or cable company providing television or phone service. Other companies are allowed by law to provide those same services. Since the goal of the people who started those companies are out to make money.

They are going to provide television and phone at a competitive price to draw consumers to them. Up until the middle 1980’s Bell telephone companies had a monopoly across the United States, until the government came back and split up the AT&T Corporation into separate companies. Now there are companies such as AT&T, Verizon, Qwest, BellSouth, Southwestern Bell, and Ameritech. If there were not people or companies like this willing to start competing companies for their own “greed”. Consumers wouldn’t have a choice and would be forced to all take their business to one company, in turn, creating a monopoly.

2. What economic factors explain why Americans enjoy much more wealth than Haitians? One factor contributing to why Haitians do not enjoy as much wealth as Americans is Haiti’s lack of a stable trustworthy financial system. According to the Wikipedia article “Economy of Haiti”. Banks in Haiti have collapsed on a regular basis. In 2000 President Aristide had introduced a non-sustainable plan of “cooperative” which promised investors a 10 percent rate of return. In that same year those cooperatives fell apart and Haitians had lost over $200 million U. S. dollars collectively.

Also since most of Haiti’s banking takes place in the city of Port-au-Prince credit and loans are not readily available to the rest of the country. Another reason why Haitians may not enjoy as much wealth is a lack of industry and manufacturing. What they do manufacture and export seems to be undercut by international completion with a skilled work force. A shortage of skilled labor does not attract business investments which would in turn create jobs and income for the people of Haiti. 3. How do private property rights channel greed into socially beneficial outcomes?

Private property rights channel greed into a socially beneficial outcome by feeding into ones selfish need to gain money by selling an idea or object that a consumer is willing to pay for. This person does not do this because he cares about anyone else but himself. He does it because he has something to gain. This can be socially beneficial because society can also gain from another’s greed. For example, Bill Gates had ideas for a computer program to make computing easier. He channeled his know how and capital into those ideas.

He took a risk by putting his time and money into ideas that may or may not have been marketable. He developed “Microsoft Windows” to make computing easier and more efficient, and then marketed it to the public. With private property rights and his intellectual property, he wanted to earn profits for the effort. So his “greed” gave him profits, and the users of his product are benefited from his “greed” and now enjoy an easier way of computing. Bill Gates and the consumer have entered into a trade which has benefited both him and the consumer.