Need help solving this problem..please answer all parts..Thanks! Let\'s say ther

Question

Need help solving this problem..please answer all parts..Thanks!

Let's say there is a company that benefits from the protection of state and local governmental agencies. And that company funds its budgets through property taxes. The product that the company creates is one that every person, from 5 to 18 years old, who lives within its service territory, is required to purchase. This protected company can open a facility anywhere it wants. However, competing companies, because they are denied the right to finance their activities through taxation, must ordinarily charge higher prices than the protected company charges. In addition, competing companies must have licenses/permits to operate, must be audited by state agencies, must follow required standards and must market their products to attract customers. Customers of these competing companies must not only pay for the higher prices but also pay property taxes to fund the protected company. Is the protected company a monopolist? Can you name such a protected company? What should consumers do to minimize, or even to break up, the benefits enjoyed by the protected company?

Explanation / Answer

10 a) Yes the protected company is monopolist , As it is receiving incentives from government and other competing companies not receiving these incentives. So government itself is promoting this monopoly. Example is Drug and health related company Johnson and Johnson which is protected by US food and drug administration for better manufacture of drugs by this company

10b)Consumers must develop bargaining power which is one of the component of 5 forces, so that they can break up benifits enjoyed by protection.consumers must also force the government to act against it and also consumers must encourage other competetors gaing them market share.

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