Are large companies that socially undesirable?

In general, it is more socially desirable to have a competitive market instead of a monopolistic or oligopoly market, since people expect the monopolistic and oligopoly companies use the market power they have got to exploit consumer surplus. Therefore, from consumers’ aspect, it is definitely not desirable for them. However, monopoly and oligopoly companies can have some positive effects.

Firstly, many state controlled companies are largely monopoly or oligopoly companies. Because they are usually natural monopolies, they can guarantee a socially desirable production level with a socially desirable price level under government influence. Secondly, the employees in monopoly companies usually receive higher incomes which make them more likely to live comfortably. Thirdly, monopoly companies have more resources, they are very interested in developing technology and create more innovative and complicated products in order to build technology barriers that prevent competition. Such strategy can actually encourage more innovation and invention since the enormous amounts of resources that the large companies have can increase the success rate of innovation and invention. Fourthly, large companies draw more social attention, the public force these large companies to take more social responsibility. Fifthly, large companies may not face competition from their industrial peers, but they can face competition from competitors from other sectors. For example, Nokia was a mobile phone giant, but got beaten by a music player maker, Apple. Therefore, monopoly companies may not be able to exploit their consumers as much as possible because of the possible competition.

To conclude, monopoly companies do not have infinite amount of market power, they also have some positive influence.