Market Structures & Business Organizations
Storyboard Text
- A corporation is a separate legal entity that is owned by shareholders. The shareholders have limited liability for the debts and obligations of the corporation and are only liable for the amount of their investment in the corporation.
- A monopoly exits when one company and its product dominate an entire industry, there is little to no competition, and consumers must purchase specific goods or services from the one company.
- Corporations are more complex to set up and require more legal and regulatory compliance than sole proprietorships and partnerships. Corporations are also taxed separately from their owners, and shareholders pay taxes on their dividends as personal income.
- Some advantages: Limited liability for shareholders, ability to raise capital through the sale of stock, perpetual existence, specialized managerial and technical expertise, easier to transfer ownership.
- Some disadvantages: Complex to start and operate, significant regulatory and reporting requirements, higher costs associated with legal and accounting fees, double taxation (corporate profits and shareholder dividends are both taxed), potential for shareholder disputes.
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