and Telegraph Company (AT&T)
John D. Rockefeller’s
Standard Oil Company
Steel Company (now U.S. Steel)
The most famous monopolies in history:
Google. They control
67% of the web search market
Examples of a Modern Monopoly:
Huge barriers to
Characteristics of monopoly:
The best examples are public
utilities in markets like electricity, water, natural gas and sewage.
Natural monopoly – when it is
more cost effective to have one large producer rather than several competing
Source: Mankiw N.
G. – Principles of Microeconomics, 7th Edition (Mankiw’s Principles of
Economics) – 2014
• The production process: A
single firm can produce output at a lower cost than can a larger number of
• Government regulation: The
government gives a single firm the exclusive right to produce some good or
• Monopoly resources: A key
resource required for production is owned by a single firm.
Monopoly potentially allows companies
to become powerful enough to prevent competitors from entering the marketplace.
The fundamental cause of monopoly is barriers to entry: A monopoly remains the
only seller in its market because other firms cannot enter the market and
compete with it. Barriers to entry, in turn, have three main sources:
Basically, in a monopoly
companies are selling a unique product in the market, the seller faces no
competition, as he is the sole seller of goods with no close substitute.
Furthermore, in monopolies companies can set prices for their output based on
the demand and supply of the market(https://economictimes.indiatimes.com/definition/monopoly); thus, a monopoly company is a price maker and competitive
company is a price taker.
Monopoly – is a market
controlled by one seller with a good product or service that has no close