Monopoly

A monopoly (from the Greek monos, one + polein, to sell) is when a product or service can only be bought from one supplier for a specific market. If other firms serve the market, they may be too small compared to the largest, thus allowing the large firm to have a lot of market power. A monopoly usually happens when there is no economic competition to produce the product or service and there is no available substitutes to the product or service.

In economics, a monopoly is a single producer of a product or service. In law, a monopoly is a firm that has a lot of market power and is able to charge very high prices for a product or service. As long as the firm has a lot of market power, it does not matter if the firm is large or small, as size is not used to decide if a firm is a monopoly.

A monopoly can be formed by the government, by merging a few firms to form a large one, or form naturally to become a natural monopoly. In many places, utilities such as telephone service or cable television are monopolies, as it is very costly to build the infrastructure for another firm to compete in the market. Such natural monopolies is hence allowed by the government, but is usually strictly controlled to prevent the monopoly from charging a very high price for a product or service.

Many countries, including the United States, have laws to stop companies from having a monopoly or to limit the actions that they can do as a monopoly.

Features of a monopoly

In classical economics, a monopoly does this:

  • Profit maximization: Just like any other firm, a monopoly tries to make their profits as big as possible and will produce an output where the marginal revenue and marginal cost curves meet.
  • Price setter: With a strong market power, the monopoly is able to set prices for their output based on the demand and supply of the market.
  • High barriers to entry: There are things that stop other firms from entering the market. These things can be either "natural barriers" or "artificial barriers".
Other Languages
Afrikaans: Monopolie
العربية: احتكار
asturianu: Monopoliu
azərbaycanca: İnhisar
Bahasa Banjar: Kuluh
Bân-lâm-gú: To̍k-chiàm
беларуская: Манаполія
беларуская (тарашкевіца)‎: Манаполія
български: Монопол
bosanski: Monopol
català: Monopoli
čeština: Monopol
Cymraeg: Monopoli
dansk: Monopol
Deutsch: Monopol
eesti: Monopol
Ελληνικά: Μονοπώλιο
English: Monopoly
español: Monopolio
Esperanto: Monopolo
euskara: Monopolio
فارسی: انحصار
føroyskt: Einahandil
français: Monopole
Gaeilge: Monaplacht
galego: Monopolio
한국어: 독점
Հայերեն: Մենաշնորհ
हिन्दी: एकाधिकार
hrvatski: Monopol
Bahasa Indonesia: Pasar monopoli
interlingua: Monopolio
íslenska: Einokun
italiano: Monopolio
עברית: מונופול
Kiswahili: Uhodhisoko
Latina: Monopolium
latviešu: Monopols
Lëtzebuergesch: Monopol
lietuvių: Monopolija
magyar: Monopólium
македонски: Монопол
मराठी: एकाधिकार
مصرى: احتكار
Bahasa Melayu: Monopoli
Nederlands: Monopolie
日本語: 独占
norsk: Monopol
norsk nynorsk: Monopol
occitan: Monopòli
oʻzbekcha/ўзбекча: Monopoliya
پښتو: انحصار
polski: Monopol
português: Monopólio
română: Monopol
русский: Монополия
Scots: Monopoly
shqip: Monopoli
slovenčina: Monopol ponuky
slovenščina: Monopol
српски / srpski: Монопол
srpskohrvatski / српскохрватски: Monopol
suomi: Monopoli
svenska: Monopol
Tagalog: Monopolyo
தமிழ்: ஏகபோகம்
Türkçe: Tekel
українська: Монополія
文言: 壟斷
ייִדיש: מאנאפאל
粵語: 壟斷
中文: 垄断