There are certain markets that are led by one or few big companies, thus forming a monopolistic, or oligopolistic, structure. Those enterprises themselves are quite happy to be in such position because of the profits and bargaining power they possess. However, there are quite a few reasons why this is not good for the economies. In some cases, even, the work of government s is influenced, which, as a result, causes some disturbance for its efficiency. SMS marketing aggregators are a great example of such cannibalisation — there is a handful of leaders, such as Twillio, Nexmo, Infobip that don’t treat the business right and prevent new players from entering. Here, we look into the situation a little deeper.
The Power Of Big Players
When companies grow to a certain size and have great profits, they too gain a lot of power. Because they are taxpayers as well as employers, they give a lot of money for the governments as taxes. Creating jobs is also something often praised by the authorities. Such situation gives them a positive image from the political point of view. Politicians, then, turn very friendly to such firms, and often amend the laws in a manner that’s beneficial to those monopolies only. While this doesn’t sound fair, it’s an old truth that everyone has their price; having this in mind, it is clear why majority of politicians are comfortably sitting in oligopolistic companies’ pockets — they are warm and full of money. Sooner than someone in power realises, they are being manipulated and get in a vicious cycle of constantly supporting the huge companies only. What’s left behind is the damage it has for small businesses when in fact, if those could survive, they would create much more added value than one monopoly can.
The Dirty Corruption
What’s even worse about such situation is that those decisions favourable for the big companies are usually made behind the closed door. Such way, the decision makers can ensure they get some benefit, too. The benefit is for the most part highly personal, and comes in a shape of huge sums of cash. Thus, corruption is thriving, and universally useful decisions are being held up.
The Greedy Dictators
As if lobbying and corruption weren’t enough, requirements for incentives come into the picture, too. As mentioned before, monopolistic and oligopolistic companies hold a lot of bargaining power because of their position as high taxpayers and big employers. Thus, they make it look as if they are entitled to some extra support. In such case, the money is spent further encouraging the huge firms, and not showing any support for small companies.
No Place For New Players
Finally, in a situation where the market is dominated by one or a few huge companies, it becomes nearly impossible for new players to join. First, dominators create incredibly high barriers for them. If that’s passed, then the leaders cannibalise prices, so that new entrants simply wouldn’t be able to afford to match the prices, and thus forced to close down. Lastly, market leaders are capable of shaping people’s opinions in a way that would make new entrants seem unreliable, and consumers are forced to stay with the old service provider.
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