Posted: April 12th, 2016

What are market interactions?

Market interactions are typically distorted due to the market power that monopolies have. Goods produced are fewer and prices are raised in order to achieve greater margins, using a market skimming approach. Where government
does not sponsor a monopoly, they may form out of mergers or even naturally out of innovation. Legal provisions aim
at certain behaviors when a company is in a dominant position, but not on being in a dominant position itself.
The role of a government monopoly is that of inducing creativity by granting companies rights to the fruits of their innovation. Other reasons why governments sanction this structure is to foster investments in a risky venture or sustaining a domestic interest group.