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Do tech monopolies stifle or spur innovation? Show more Show less

A technological monopoly occurs when one company exclusively controls the right to sell a service or product. A company that holds a technological monopoly is free to set prices as high or as low as they want, due to the lack of competition in the given field. This debate is centered on the role of the government in the economy and whether tech companies have an incentive to self-regulate their innovative capabilities.

Tech monopolies lack competition and the desire to innovate Show more Show less

A monopoly allows innovation to be a choice. A company that innovates out of necessity is innately more innovative than a company that chooses to do so.
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Competition drives innovation

Tech monopolies don't innovate because they have to, they innovate because they want to. Competition consistently drives innovation, and is absent when monopolies are present.
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competition economy monopoly technology

Context

The Argument

Competition between tech companies rewards innovation and incentivises companies to continue improving. A company must innovate to have a chance at long term success. While competition will distribute profit between a larger number of companies and limit the capital that company has to innovate, this will not stifle innovation. Instead, it will force companies to be more conscious of the technology they are developing. In addition, some governments are offering financial incentives[1] for innovation in different sectors, so there are ways to mitigate the financial disadvantage of competitive markets. Competition between companies will allow them to innovate based on consumer need. Without consumer-based innovation, tech giants like Amazon would not exist. Amazon adapted to meet consumer needs for online shopping after starting as an online bookstore.

Counter arguments

While competition may drive short-term innovation, long term innovation will be significantly hindered due to resource distribution. A monopoly allows one company to serve every customer, whereas a competitive market divides the customers between multiple companies. This restricts the profit of the companies within the competitive market. A company in the competitive market now has to choose what it wants to innovate, and its innovative capacity may be limited by resources and capital.

Framing

Premises

[P1] Competition between companies encourages them to innovate rather than getting comfortable.

Rejecting the premises

[Rejecting P1] Competition does not allow for long-term innovation as companies will not have the resources required.

Proponents

Further Reading

References

  1. https://edisonawards.com/news/competition-drive-innovation/

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This page was last edited on Thursday, 16 Apr 2020 at 12:21 UTC