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impact of globalization on monopoly power

How are the globalization and monopoly power related? When globalization is increased, how does monopoly power impact on developed and developing countries from both good and bad sides?

2 answers

answered 17 days ago

Ryan S.

Hi Shun,

This is a very interesting question however you will probably need to focus more on a specific sector or market given the number of variables which could impact on monopoly power. For instance, a good side may be the movement of MNC's into emerging economies, increasing economic output, as well as utilizing economies of scale/ specialization to reduce costs for consumers. However, on the bad side, the openness of trade could lead to domestic industries being destroyed, with the country then becoming focused on importing goods which can lead to wider economic issues such as currency devaluation and inflationary pressures as well as unemployment in the country. To combat this, some emerging economies place trade protection measures; for instance, Malaysia for many years protected its domestic car builder Proton by placing tariffs on imported cars. Similar methods are also being talked about in the U.S. given rhetoric from Donald Trump.
The basic idea would be that increased globalization reduces monopoly power as consumers have more choice; potentially reducing monopoly power more in the developing world given the movement of MNC's from developed economies which are more advanced.
If this was a dissertation, the structure would be the development of a case study, whereby you would consider the market over the time. For instance, if we use Kantar Worldpanel and look into the UK grocery market we can, over recent years see that Tesco loses market share as discount rivals from Germany expand into the marketplace. Similar could be done with emerging economy examples.

If you require any further help please don't hesitate to message me directly. My educational background is in economics and so this is an area I do focus on.

Kindest Regards,

Ryan Shaw

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answered 17 days ago

Aurora A.

Globalization and monopoly power are directly related. As globalization is increased, monopoly power impacts favourably on the economies of developed countries but unfavourably on the economies of developing countries.

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