Text 5

Local public utilities normally see no point in large expenditures for advertising: local citizens who want water, gas, electric power, and telephone service already know from whom they must buy these necessities.

If pure monopolists of the public utility variety do advertise, such advertising is likely to be of a public relations, or goodwill, character rather than highly competitive, as is the advertising associated with, say, cigarettes, detergents, and beer. Because they have no im­mediate rivals, monopolists, in trying to induce more people to buy their products, need not invoke the ours-is-better-than-theirs type of advertising which characterizes radio and television. Rather, the monopolist’s pitch is likely to be, “We’re really nice fellows and certainly wouldn’t do anything to exploit other firms, our employees, or, heaven forbid, consumers”.

We have emphasized that the individual firm operating under pure competition exer­cises no influence over product price; it is a “price taker”. This is so because it contributes only a negligible portion of total supply. In vivid contrast, the pure monopolist is a price maker; the firm exercises considerable control over price.

Text 6

By granting an inventor the exclusive right to control a product for seventeen years, American patent laws are aimed at protecting the inventor from having the product or process usurped by rival enterprises which have not shared in the time, effort, and money outlays which have gone into its devlopment. By the same token, of course, patents may provide the inventor with a monopoly position for the life of the patent. Patent control figured prominently in the growth of many modern-day industrial giants - National Cash Register, General Motors, Xerox, Polaroid, General Elestric, du Pont, to name a few. The United Shoe Machinery Company provides a notable example of how patent control can be abused to achieve monopoly power. In this case United Shoe became the exclusive supplier of certain essential shoemaking machines through patent control. It extended its monopoly power to other types of shoemaking machinery by requiring all lessees of its patented machines to sign a “tying agreement” in which shoe manufacturers agreed also to lease all other shoemaking machinery from United Shoe. This allowed United Shoe to monopolize the market until partially effective antitrust action was taken by the government in 1955.

Exercise 10

Text 7

У 1980-x роках у промисловості США прокотилася хвиля реорганізацій, викли­каних спробою корпорацій перебудуватися для кращої конкурентноспроможності. Плекаючи надії на подальший розвиток та процвітання, фірми вдавалися до таких заходів, як злиття компаній, їхнє приєднання та поділ, створення спільних підпри­ємств, щоб усунути виробництво другорядної продукції, злитися з конкурентом, ку­пити його чи перерозподілити кошти, зважаючи на економічні умови та підвищення активності іноземних конкурентів.

345