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Why are monopolies detrimental to a free market economy?

Why are monopolies detrimental to a free market economy?

Public Comments

1. try to sell a operating system and web browser. There are some free ones but you will not make much competing with a company who installs their programs on all computers.
2. Monopolies sell to maximize revenue over costs, but not to minimize prices. Prices do not reflect the true cost to society or their scarcity, hence they are inefficient. Prices are too high and quantity is lower than what it would be under perfect competition.
3. Monopolies allow a single firm to exert high influence in the market. The answerer above me is correct, the prices are higher than they should be, although the quantity supplied might or might not be lower than it would be in a free market. This would be similar to the detrimental effect of communism, however on a smaller scale, in that supply and price is determined by a small group. Essentially, it gives the buyer very little power over price and quantity supplied, and usually monopolies occur in industries that most people rely on.
4. It is important to distinguish between a coercive monopoly and competitive monopoly. A coercive monopoly is a business concern that can set its prices and production policies independent of the market, with immunity from competition and the law of supply and demand. A coercive monopoly is only possible through government intervention; without government assistance it's impossible for a would-be monopolist to set and maintain his prices and production policies independent of the rest of the economy. This is because the high prices and profits enjoyed by a monopolist would attract new entrants into that industry and eventually drive prices down. Coercive monopolies only enjoy their status because of government regulation that bars potential rivals from entering in that industry. The competitive monopoly, on the other hand, achieves that position by improving its efficiency and lowering costs, thus allowing it to charge a price lower than the competition. Competitive monopolies are not only not harmful but actually make an economy more efficient by providing quality goods and services at lower prices.