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Disadvantages of operating a monopolistic business.
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[QUOTE="King bell, post: 265496, member: 75687"] The disadvantage of operating a monopolistic business is that the business may not have to innovate, meaning it will be slow to change with the times. If the company is unable to innovate, it could lose its competitive edge in the market and the demand for its goods or services may decrease. The monopolistic business may not be able to recover from these losses. This can lead to a lack of investment in new products or even bankruptcy as a result of rising debts. Additionally, another disadvantage is that monopolies often practice predatory pricing tactics and collusive agreements for instance through tacit collusion which could drive out competitors and create an unfavorable environment for consumers who are being manipulated into buying goods with higher prices than what they would otherwise pay otherwise if there were more competition in the market. Monopolistic business often operate with low cost systems which enable them to lower prices, affordable goods, and excellent customer service that consumers often expect from large corporations which can potentially attract customers. Monopolistic businesses can also experience higher profits than their competitors because of the economies of scale that are greater in monopolies. This benefit does not go to the consumer as high prices are paid by the companies' customers which is where higher costs come from. Despite this, monopolistic businesses may be able to raise prices more rapidly than non-monopolistic businesses due to their power in the market, resulting in lower prices for consumers at some point but at greater cost to the company itself in terms of lowered profits and poorer customer service. [/QUOTE]
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