Suppose the government breaks up the giant Exxon mobile oil company to create more competition.  Explain whether you believe this would be a good decision and how efficiency, costs, price, profits, and consumer's welfare would be affected. Is monopoly power always a negative influence on performance?.

             After reading about the monopolistic abuses and excesses of early American capitalism that the Sherman Anti-Trust Act was designed to prevent, it might be tempting to go towards the entirely opposite polarity of opinion and assume all corporate monopolies are bad. "The history of Standard Oil, students frequently tell me, proves that monopolies exist in free markets - and that they do raise prices arbitrarily - and that this is precisely why we need antitrust laws." (Armentano, 1992) But, in the case of a non-renewable resource, in an industry with high entrance barriers such as gas, electricity, and to a lesser extent oil, this is not the case. Monopolies or oligopolies, if government-regulated, can actually protect the consumer, not just the corporations.

             It is important to remember that the oil industry is not a monopoly. "The clearest definition of monopoly is one seller, with the law prohibiting competitors from entering the market. Local telephone and cable-television companies provide such examples of pure, state-regulated monopolies. (Armentano, 1992) These monopolies are government-controlled to prevent the monopolies from trying to charge the consumers too much, and so consumers can complain or take legal action against the monopoly if the company abuses its ability to set prices. In the case of the oil industry, the current state of affairs is a marketplace exhibiting oligopoly-style competition, a small market of large providers with minimal competition between companies. Exxon is one of those major oil and gas providers. But the government also regulates oligopolies in select industries, placing limits upon oil drilling in certain areas, making gas gouging illegal for local providers, and placing standards upon how much money large companies can charge for certain products, such as heating the living spaces of the indigent.