What is a monopoly?
A monopoly describes a situation in which a company is either the sole supplier of a product or service or one of a small number of such suppliers. Governments across the world have legislated to ban, break up or regulate monopolies.
Where have you heard about monopolies?
Investors following the latest takeover bids will frequently hear of 'monopoly concerns' about the likely effect of the proposed tie-up on competition in a market economy. Politicians will promise to get to grips with any alleged monopolies said to be abusing their position to over-charge consumers or to shut out other businesses.
What you need to know about monopolies.
A monopoly can arise for several reasons, the most obvious being that the business concerned has been granted a licence by the state giving it sole rights over a product or service. More common in recent times has been the innovative company whose offering has become hugely popular and, because of patent or copyright protection, it faces no competition in this field. In more established business sectors, the collapse of a large concern can leave the only rival in a monopoly position. Anti-monopoly legislation, also known as anti-trust, in most jurisdictions provides for penalties for businesses conspiring to create a monopoly.
Find out more about monopolies.
To learn more about monopolies and how they affect the economy, see our definition of competition.