Monopoly

A monopoly is a market in which one person or company is the only supplier of a particular good or service. A monopoly is characterized by a lack of economic <a href="/facts/Competition_(economics)/zscsQx5l">competition</a> to produce a particular thing, a lack of viable <a href="/facts/Substitute_good/oK7UJNjw">substitute goods</a>, and the possibility of a high <a href="/facts/Monopoly_price/cYkWhdMb">monopoly price</a> well above the seller's <a href="/facts/Marginal_cost/fcKjM5Mr">marginal cost</a> that leads to a high <a href="/facts/Monopoly_profit/HkVKTY2L">monopoly profit</a>. The verb monopolise or 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 <a href="/facts/Monopoly_price/cYkWhdMb">overly high prices, which is associated with unfair price raises</a>. 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 may also have monopsony control of a sector of a market. A <a href="/facts/Monopsony/DUX50nKb">monopsony</a> is a market situation in which there is only one buyer. Likewise, a monopoly should be distinguished from a <a href="/facts/Cartel/S4x967k2">cartel</a> (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies, monopsonies and <a href="/facts/Oligopolies/SDh6loza">oligopolies</a> are all situations in which one or a few entities have <a href="/facts/Market_power/oyYb7b3L">market power</a> and therefore interact with their customers (monopoly or oligopoly), or suppliers (monopsony) in ways that distort the market.
Monopolies can be formed by mergers and integrations, form <a href="/facts/Natural_monopoly/Mgy20eU3">naturally</a>, or be established by a government. In many jurisdictions, <a href="/facts/Competition_law/cq7hKYN4">competition laws</a> restrict monopolies due to government concerns over potential adverse effects. Holding a dominant position or a monopoly in a market is often not illegal in itself; however, certain categories of behavior can be considered abusive and therefore incur legal sanctions when business is dominant. A <a href="/facts/Government-granted_monopoly/91S8rs03">government-granted monopoly</a> 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 <a href="/facts/Advocacy_group/7oNDHtPI">interest group</a>. <a href="/facts/Patent/LjT2bG3A">Patents</a>, <a href="/facts/Copyright/7GHEWEx9">copyrights</a>, and <a href="/facts/Trademark/B23H8IS0">trademarks</a> are sometimes used as examples of government-granted monopolies. The government may also reserve the venture for itself, thus forming a <a href="/facts/Government_monopoly/d2qAMkgp">government monopoly</a>, for example with a <a href="/facts/State-owned_company/yml2hFlI">state-owned company</a>.
Monopolies may be <a href="/facts/Natural_monopoly/Mgy20eU3">naturally</a> occurring due to limited competition because the industry is resource intensive and requires substantial <a href="/facts/Overhead_(business)/KodqdRBp">costs</a> to operate (e.g., certain railroad systems).

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Monopoly