Principle of Economics
In any market, there are producers and consumers. They all play an essential role in the trade of goods and services. There are several types of markets based on the characteristics of buyers and sellers. One of the core types is a monopolistic market. It is a setting where there is only one supplier of a particular product. There may be numerous numbers of buyers, but only one supplier is allowed to meet the demands. Based on the principle of monopolistic competition, some companies apply for monopoly power over the goods that they produce. They file copyright acts against the manufacture of commodities similar to theirs. Any other organization caught manufacturing the same can be sued and legal action taken against them. The medical sector directly affects the citizens, and a slight mistake in the processing of drugs may harm a large number of consumers. This paper is an analysis of both the negative and positive effects f having monopoly power over their products in the wake of the Coronavirus pandemic.
POSITIVE ECONOMIC IMPACTS
Every organization aims to make as much profit as possible. There are some hindrances that happen in the market, such as competition. In a free market system, people are allowed t produce goods as they wish with n restrictions. According to the law of supply and demand, an increase in the number of goods supplied in the market reduces their demand. In that case, the monopoly helps remove the competitors. Only one company is allowed to produce drugs of a precise nature. An occurrence such as the coronavirus outbreak means that the suppliers of drugs can reap enormous profits y selling drugs in bulk. An excellent illustration is the increased demand for Favilavir in china. Many pharmaceutical dealers, hospitals, and clinics may purchase the drug. If the manufacturer of the drug has a monopoly rule, they are bound to make more substantial profits since they are the only ones supposed to supply the drugs.
Monopoly also increases the competitiveness of a brand. In the medical field, people buy drugs that they are sure are helpful in treating the condition that they have. As long as buyers have the capital to purchase a drug of choice, they are likely to choose one that has been tested and proven to cure the condition. The use of patients allows manufacturers to test their drug performance and develop even better strains of the same drugs. The result is the improvement of the quality of the drugs and better reputations for the company. It would not be possible for a company to be given competitive enough if there was no specified supplier of the medicine. If thee are several manufacturers of the drug, it may also be hard for one supplier to develop faster than the others. Finally, the monopoly helps reduce counterfeit drugs in the market. A rise in demand may lead to the rise of fake personnel who parade themselves as a known company. They aim at earning profits from high demand. If there is only one known organization responsible for production, it may be hard for duplicate drugs to enter the market.
NEGATIVE IMPACTS
Monopoly, however, leads to a reduced supply of goods in the market. The rise of the Corona Virus, the demand for drugs is very HIGH. Considering that most of the firms that produce such dugs have pertinent, it may be hard for the high demand to be met. They may not have the resources to curb the high demand due to the sudden increase in the number of patients. Moreover, manufacturers may exploit patients. The knowledge that they are the only ones who can supply certain drugs to the market makes the suppliers increase the price of their goods, making them unaffordable.