Archive formonopoly

The End Of Price Hikes for Pharmaceuticals?

Many drug companies hold monopolies over production of certain medications simply because of patents. However, this Business Insider article shines light on a type of monopoly no one thinks to talk about. Similar to the “You can’t take it with you” effect discussed in class, certain drug companies will excessively raise their prices because they are producing a life saving drug for which there is no substitute. The demand is presumably inelastic, but they also don’t have very large markets in general. Therefore, these “orphan drugs” don’t make the companies which produce them any profit because the market is so small. Since profits aren’t being made, even when patents expire generic drug makers have no signal to enter into the market thus allowing the monopoly to remain. With no true market price these firms feel they can set whatever price they want, thus leading to 5000% increases of prices in some cases. However, they are still subject to demand and while patients who need these drugs will continue to purchase them, the pressure is increasing for these companies to increase their consideration of their consumers. As highlighted in the article, when firms less than ethical prices hikes were exposed, several announced plans to cut prices. Could the end of exorbitant prices for these “orphan drugs’ be headed our way? Is all it takes to increase a company’s ethics is expose their behind the scenes dirty work?

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Maersk previously Monopolized Trade; now Separating and Specializing

http://www.bbc.com/news/uk-scotland-scotland-business-37441698

Maersk being one of the largest shipping companies in the country has monopolized the shipping industry in Denmark for 11 years. The country worries that the company has decreased in trade. In order to counterbalance their decrees in trade, the 112 year old company is breaking up its  590 ships large and 500 smaller ships. The company currently  is the operator of one of the biggest gas field developments in the UK waters, along with monopolized production in  Denmark, Qatar, Kazakhstan, the US Gulf of Mexico and Algeria. Additionally, further development is currently underway in half a dozen other countries.

They have decided to split form their oil, drilling,  and offshore services, as profits in that division have come in far below their predicted expectations. The companies decision to separate businesses will allow them to focus on their most profitable markets. The company has decided to focus on its transport and logistics business. Their decision to shrink back from the global market will allow then to specialize in the areas where they can make the greatest profit.

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