Question

Why may monopolies be desirable or undesirable?

Answer 1

Monopolies are more undesirable than desirable. While the only reason that can be attributed to making them desirable is dynamic efficiency gains, there are quite a few reasons that make them undesirable such as:

*No or very less competition from other sources, which paves way for lesser scope of improvement

*Lower volume of output and incurrence of huge costs with very less incentive measures to reduce these costs

*No scope for implementing innovative ideas