Monopoly
A monopoly (from Greek mono, alone or single + polο ), to sell) is a persistent situation where there is only one provider of a product or service in a particular market. 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 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.
A government-granted monopoly or legal monopoly is sanctioned by the state, often to provide an incentive to invest in a risky venture. The government may also reserve the venture for itself, thus forming a government monopoly.
It is argued in contemporary monopoly theory that if a monopoly is not protected from competition by government restrictions, then it is subject to potential competition and therefore is not able to gouge consumers without causing competitors to enter the field to take advantage of profit opportunities.
Monopoly should be distinguished from 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.
A government-granted monopoly or legal monopoly is sanctioned by the state, often to provide an incentive to invest in a risky venture. The government may also reserve the venture for itself, thus forming a government monopoly.
It is argued in contemporary monopoly theory that if a monopoly is not protected from competition by government restrictions, then it is subject to potential competition and therefore is not able to gouge consumers without causing competitors to enter the field to take advantage of profit opportunities.