Module 6 Discussion
After watching the video clip from Forrest Gump, consider that Forrestâ€™s good luck of â€œbeing in the right place at the right timeâ€ allowed him to operate as a monopoly. Typically, the fishing industry is a highly competitive industry where economic profits are rarely made in the long run. However, in a twist of fate, Forrestâ€™s boat is the lone survivor after a hurricane washes ashore and destroys all the other shrimp boats.
Consider the barriers to entry facing potential competitors in Forrestâ€™s monopoly market. The more contestable a market, the closer it will be to a perfectly competitive market, whereas the less contestable a market, the closer it will be to a monopoly.
What barriers to entry exist in other industries that allow certain firms to operate as a monopoly? Are these barriers contestable?