A monopoly (from Greek monos μόνος (alone or single) + polein πωλεῖν (to sell)) exists when a specific person or enterprise is the only supplier of a particular commodity (this contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly which consists of a few entities dominating an industry). Monopolies are thus characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods. The verb "monopolize" refers to the process by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power, to charge high prices. Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market).
A monopoly is distinguished from a monopsony, in which there is only one buyer of a product or service ; a monopoly may also have monopsony control of a sector of a market. Likewise, a monopoly should be distinguished from a cartel (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies, monopsonies and oligopolies are all situations such that one or a few of the entities have market power and therefore interact with their customers (monopoly), suppliers (monopsony) and the other companies (oligopoly) in a game theoretic manner – meaning that expectations about their behavior affects other players' choice of strategy and vice versa. This is to be contrasted with the model of perfect competition in which companies are "price takers" and do not have market power.
When not coerced legally to do otherwise, monopolies typically maximize their profit by producing fewer goods and selling them at higher prices than would be the case for perfect competition. Sometimes governments decide legally that a given company is a monopoly that doesn't serve the best interests of the market and/or consumers. Governments may force such companies to divide into smaller independent corporations as was the case of United States v. AT&T, or alter its behavior as was the case of United States v. Microsoft, to protect consumers.
Monopolies can be established by a government, form naturally, or form by mergers. A monopoly is said to be coercive when the monopoly actively prohibits competitors by using practices (such as underselling) that derive from its market or political influence. There is often debate of whether market restrictions are in the best long-term interest of present and future consumers.
In many jurisdictions, competition laws restrict monopolies. Holding a dominant position or a monopoly of a market is not illegal in itself, however certain categories of behavior can, when a business is dominant, be considered abusive and therefore incur legal sanctions. A government-granted monopoly or legal monopoly, by contrast, is sanctioned by the state, often to provide an incentive to invest in a risky venture or enrich a domestic interest group. Patents, copyright, and trademarks are sometimes used as examples of government granted monopolies, but they rarely provide market power. The government may also reserve the venture for itself, thus forming a government monopoly.
Read more about Monopoly: Market Structures, Characteristics, Sources of Monopoly Power, Monopoly Versus Competitive Markets, The Inverse Elasticity Rule, Price Discrimination, Monopoly and Efficiency, Monopolist Shutdown Rule, Breaking Up Monopolies, Law, Historical Monopolies, Countering Monopolies
Other articles related to "monopoly":
... A monopoly can seldom be established within a country without overt and covert government assistance in the form of a tariff or some other device ... The De Beers diamond monopoly is the only one we know of that appears to have succeeded (and even De Beers are protected by various laws against so called "illicit" diamond trade) ...
... Because Monopoly evolved in the public domain before its commercialization, Monopoly has seen many variant games ... Most of the variants are exact copies of the Monopoly games with the street names replaced with locales from a particular town, university, or fictional place ... Over the years, many specialty Monopoly editions, licensed by Parker Brothers/Hasbro, and produced by them, or their licensees (including USAopoly ...
... Monopoly Here and Now The World Edition Publisher(s) Parker Brothers Players 2–6 Setup time 5–15 minutes Playing time About 1.5 hours Random chance High (dice rolling, card ... was chosen as one of the 20 cities to be featured in the newest Monopoly World Edition ... We apologize to our Monopoly fans." Monopoly Here and Now The World Edition (2008) Free Parking Sydney M2.2 Chance ? New York M2.2 London M2.4 Monopoly Cruise M2 Beijing M2.6 Hong Kong M2.6 ...
... Many Monopoly-themed slot machines and lotteries have been produced by WMS Gaming for land-based casinos ... WagerWorks, who have the on-line rights to Monopoly, have created online Monopoly themed games ... London’s Gamesys Group have also developed a bingo-based online game called "Monopoly Snap!" for the Jackpotjoy online bingo site ...
... Monopoly The Mega Edition is a special variant of the popular board game Monopoly ... The game board is larger than that of regular Monopoly (30% bigger) ...
Famous quotes containing the word monopoly:
“Like many businessmen of genius he learned that free competition was wasteful, monopoly efficient. And so he simply set about achieving that efficient monopoly.”
—Mario Puzo (b. 1920)
“United Fruit... United Thieves Company... its a monopoly ... if you wont take their prices they let your limes rot on the wharf; its a monopoly. You boys are working for a bunch of thieves, but I know it aint your fault.”
—John Dos Passos (18961970)
“Im plotting revolution against this lie that the majority has a monopoly of the truth. What are these truths that always bring the majority rallying round? Truths so elderly they are practically senile. And when a truth is as old as that, gentlemen, you can hardly tell it from a lie.”
—Henrik Ibsen (18281906)