In economics, a monopoly (from the Latin word monopolium - Greek
language monos, one + polein, to sell) is defined as a persistent
market situation where there is only one provider of a kind of product or
service. Monopolies are characterized by a lack of economic competition for the
good or service that they provide and a lack of viable substitute goods.
Monopoly should be distinguished from monopsony, in which there is only one
buyer of the product or service; it should also, strictly, be distinguished from
the (similar) phenomenon of a cartel. In a monopoly a single firm is the sole
provider of a product or service; in a cartel a centralized institution is set
up to partially coordinate the actions of several independent providers (which
is a form of oligopoly).
Forms of monopoly
Monopolies are often distinguished based on the circumstances under which
they arise; the broadest distinction is between monopolies that are the result
of government intervention and those that arise without it e.g. sole access to a
resource, economies of scale, or consistently outcompeting all other firms.
- Legal monopoly
A form of coercive monopoly based on laws explicitly preventing competition
is a legal monopoly or de jure monopoly. When such a monopoly is granted to a
private party, it is a government-granted monopoly; when it is operated by
government itself, it is a government monopoly or state monopoly. A government
monopoly may exist at different levels (eg just for one region or locality); a
state monopoly is specifically operated by a national government.
An example of a monopoly is AT&T, which was granted monopoly power by the
US government, only to be broken up in 1982 following a Sherman Antitrust
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