Market Domination Can Lead to High Prices and Poor Service Delivery

Expedia Inc.

Market domination creates a monopoly-like environment that may result in high product prices that may not really be matched with the quality of services and products Domination of the market by one company may also lead to inefficiencies in service provision due to lack of competition. The effect of this is poor service delivery hence a lack of value for money. The prices of products and services may increase in case one company controls a bigger market share than the competitors. This is shown by the fact that if the dominant company has operations in a wide geographical area, such that only its products and services are available, the company might charge premium prices as a result of lack of competitors. The other major disadvantage of market domination by one company is the lack of variety of products and services. The consumer will be denied access to a variety of products and hence may not get the best quality. On the other hand, market domination may not necessarily be bad. This can be so if the competitors, in a bid to capture market share reduce the prices of their products hence customers are able to enjoy lower prices. Market domination by a company can also have benefits to the shareholders and society in general. The high profits earned by the company will translate into more earnings to the consumers and therefore shareholders' wealth maximization.

Reference

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