The Domestic Long Distance Market & Competition

While it is true that monopolies can exercise a considerable amount of market power, it is also true that there are few true monopolies in the American economy; the threat of additional competition makes it difficult to sustain a monopoly for a long period of time. However, one of the most notorious monopolies, in part because it was sanctioned by the government, was that of American Telephone and Telegraph (now AT&T). This research examines the nature of competition and considers the current state of the domestic long distance market.

A complete monopoly exists when there is a single producer with a unique product which has no close substitutes (Samuelson, 1976, p. 491). This gives the seller considerable influence over the price that can be charged for the good or service. The monopoly most likely engages in institutional public relations advertising since it is not necessary to advertise the product or service itself. Another key feature of monopolistic competition is that there must be significant barriers to entry; perhaps large capital investment would be required for new companies to enter the market. Without these barriers, the monopoly would face considerable competition from other companies seeking to take advantage of the demand in the market.

Utilities are a current situation of a monopoly and also a situation where market power has been exercised. Because of the unique nature of the product (key to survival in today's age), an

Related Essays

Long Distance Industry & AT&T .... the market) to build on its domestic and international .... certain to greatly affect the long distance market, and the nature of the competition within that .... (1907 8 )

Role of AT&T in the Long Distance Market .... long-range view of its domestic market (Christopher 2 .... a strong competitor in the long distance telephone market .... indicative of the company's long-term commitment .... (1459 6 )

Long Distance Industry & Market .... a long-range view of its domestic market (Christopher 2 .... phase of the life cycle that the long distance market is in. .... in price, and may leave the market open to .... (1429 6 )

Transformation of Long Distance Phone Services .... to open the market to competition would be .... Sprint depends on domestic long distance service for only .... financial resources to protect its long-distance market. .... (740 3 )

Long Distance Telephone Industry & Market .... long-range view of its domestic market (Christopher 2 .... a strong competitor in the long distance telephone market .... indicative of the company's long-term commitment .... (1459 6 )

paste is one example of a product which is marketed in an imperfect market. Perfect competition is rare even in the most open capitalistic economies, although it does exist in some agricultural commodities. In absolute perfect competition, price is the only differentiator of products or services, and such products are often sold at auction. The stock market is another example of nearly perfect competition (Samuelson, 1976, p. 491). The Long Distance Telephone Market The long distance telephone services market in the United States is an example of a monopoly which became an oligopoly, and which is now undergoing additional transformation. Until 1984, American Telephone & Telegraph (AT&T) enjoyed a monopoly on long distance telephone service and most local telephone service in the United States. AT&T argued that it had invested large amounts of capital to build one of the most advanced telecommunications networks in the world, and to open the market to competition would be to give new entrants unfair advantage since they did not have to support the research and development that AT&T had taken on previously. However, in 1984, under a suit brought some years earlier by MCI Communications, AT&T was broken up into eight companie

Category: Business - T