Benefits would businesses gain if they worked with each other like they were a monopoly are:
⇒Economies of scale- lower average costs from increased scale
⇒High profit can be used for research and development - dynamic efficiency
⇒The reward of getting patent (a monopoly power) can encourage investment
⇒Firms who become monopolies may just be very efficient, successful and innovative.
⇒Governments can regulate to get best of both worlds - economies of scale and fair prices.
Monopolies are firms who dominate the market. Either a pure monopoly with 100% market share or a firm with monopoly power (more than 25%) A monopoly tends to set higher prices than a competitive market leading to lower consumer surplus.
However, on the other hand, monopolies can benefit from economies of scale leading to lower average costs, which can, in theory, be passed on to consumers.
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