There’s No Limit to Google’s Market Power Research Assignment

Monopolies
Name
Institution
Monopolies
Summary
The article “There’s No Limit to Google’s Market Power” that was published in The New York Times discusses the problems of monopolies. The author Vollrath Dietrich argues that in a normal market, when doing any transaction there is a maximum price that one would be required to pay for that item. This is based on factors such as the quality of the product, the convenience of the location where one is buying, and the environment where the product is located among others. In the same way, there is also a minimum price that the product would be sold for to cover the expenses of creating the product. The difference between the maximum price and the actual price is what is often referred to as “consumer surplus” (Vollrath, 2016). One could have paid more for the product but did not because of the consumer surplus.
The article claims that when it comes to a monopoly things are different. Basically, monopolies lower the consumer surplus because it has the market power, which it uses to determine how the actual price relates to the maximum price that a consumer has to pay. The market power does not necessarily happen because there are few firms or even one but it happens because the consumers’ preferences become inflexible and it means there is a fixed demand for the product. If a consumer cannot live without that product, then the firm will charge a price that is close to the maximum price that one would have been required to pay. The article argues that every firm has some form of market power (Vollrath, 2016). For example, if a consumer prefers to buy gas from the gas station near his/her house as opposed to the one across the street that has a lower price, the convenience of the gas station near one’s house gives it the market power.
The article argues that Google has something like this market power but on a wider scale. Google holds a lot of market power because leaving it would be almost impossible for those who need a search engine with convenience and the right specifications for the product. Google has both the search engine and the Android operating system that gives it a privileged location that consumers need. The article, however, argues that Google’s market power is pervasive compared to the gas station example because there is no limit to its market. Google is in every neighborhood through the Internet and it can even be thought of as the neighborhood, in various aspects. Given its market power, Google is capable of charging a price for their services or products ...