In July 2016 Apple's share of the UK market for smartphones was 38% - Edexcel - A-Level Economics A - Question 8 - 2018 - Paper 1

High market share can enhance consumer interest through:

• Limit Pricing: Apple may set prices that reflect efficient production, thereby benefiting consumers.
• Quality Improvements: Increased profits can lead to better service, product updates, and innovation, enhancing consumer experience.
• Economies of Scale: As Apple increases production, the average cost per unit may decrease, which could lower prices for consumers.

Conversely, a high market share may work against consumer interest by:

• Price Manipulation: Apple could engage in profit maximization strategies, leading to higher prices compared to a competitive market.
• Collusion Risks: With fewer competitors, there is a higher risk of collusion, which can limit consumer choices.
• Quality Concerns: A focus on profits may lead to a decline in product quality or customer service.

To illustrate the impact of monopoly power, we can use a monopoly diagram. The diagram typically shows that a monopolist sets a price higher than marginal cost, leading to reduced quantities produced compared to a competitive market. This can be depicted as:

P
|
|                        D
|                       / \
|                     /      \
|          MR       /         \
|                  /            \
|______F________/____________#______
|       Qm
|
|  MC       Price
|
|
|____________________ Q

Where:

• P = Price
• Q = Quantity
• MR = Marginal Revenue
• MC = Marginal Cost
• D = Demand

The overall evaluation depends on various factors:

• Competitiveness: If competitors can effectively challenge Apple's market position, consumers might benefit from lower prices and improved services.
• Regulatory Impact: The effectiveness of regulation by the CMA in monitoring and controlling monopolistic practices is crucial for protecting consumer interests.
• Long-term Effects: Stakeholders need to consider whether high profits lead to reinvestment in innovation, potentially benefiting consumers through better products.