Monopolies and Oligopolies Essay Example | Topics and Well Written Essays - 500 words

Monopolies and Oligopolies - Essay Example However, this competitor does not fit the definition of close substitute and has difficulty entering the market. Apple has recently introduced the Windows Operating System on its machines and has reinforced Windows as a monopoly. Consumers are tied to Windows for practical reasons as well as the piece of mind that familiarity brings and they can find no close substitute. When consumers can find no close substitute and are locked into a data processing system, it allows Microsoft to charge whatever the market will bear. In the Microsoft model, they have priced their software at the level that will produce the greatest returns without effecting demand. This has allowed them to optimize their pricing based not on demand, but as price setters. This is another indication that they are a monopoly. People will no sooner switch from Windows than they would buy a rhinestone engagement ring as a substitute for a DeBeers diamond, no matter what the cost. The fact that they have a barrier to entry, can set the price on their own terms, and have a consumer base that will not accept a substitute makes Microsoft one of the largest monopolies in the history of the world Similar