Monopoly: Maximizing Profits Essay

896 words - 4 pages

There is no question that a monopoly can set prices in order to maximize profits, as well as impose costs upon society by such price setting. One example of this is with the recent Canadian bank mergers. There exists a great deal of contrasting opinions with regard to the issue of Canadian bank mergers; however, for the most part, it appears as though Canadian officials and private citizens alike are not favoring the marriages between and amongthe big banks. Cited for a number of reasons including lost jobs and higher costs for various transactions, the proposed merging of five of Canada's most influential financial institutions has caused a great deal of concern with regard to monopolizing profits at consumers' expense. In an age when bigger does not always equate to better, Canadians are worried that such unification will be a terribly costly mistake."With the deregulation of the financial services in the Canadian market and speculative capital flowing impeded across national borders abroad, banks are increasingly making their money out of their international transactions.It is much more difficult to regulate their activities. We have no clue how much money they make in places like the Caribbean" (Weinberg, 1998, p. PG).As long as the proposed bank mergers have been expected to take place, opponents from all walks of life have urged such unification not to transpire. As such, the Canadian government has been victim to a barrage of pressure from both its public and private constituency encouraging the disapproval of such an undertaking. The primary argument with regard to the opposition of the bank mergers is that it would leave seventy percent of the country's banking industry in the hands of just two megabanks; when such a monopoly is created, that often means cuts in employment, increases in transaction fees and the removal of competition. January 1998 was the month when the Royal Bank and the Bank of Montreal announced that their respective institutions would seek to integrate their operations; just a few months later, the Canadian Imperial Bank of Commerce and the Toronto Dominion Bank declared their decision to follow suit. As soon as the news circulated of such a monumental occurrence, there was immediate reaction from several societal sectors, including small businesses, consumers, unions and anti-poverty groups, urging the government to deny the mergers (Weinberg, 1998).The reasons for their concern were multifold; people were prone to losing their jobs, transaction charges would be destined for untold increases and the level of service given to the public would likely decline with no competition to keep them in check. Coalition spokesman Duff Conacher recognizes the tendency to abandon standard business...

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