This is termed "monopolistic competition", whereas in an oligopoly, the companies interact strategically. Sometimes, there are many sellers in an industry or there exist many close substitutes for the goods being produced, but nevertheless companies retain some market power. If there is a single seller in a certain market and there are no close substitutes for the product, then the market structure is that of a "pure monopoly". A monopoly is a structure in which a single supplier produces and sells a given product or service. There are four basic types of market structures in traditional economic analysis: perfect competition, monopolistic competition, oligopoly and monopoly. In economics, the idea of monopolies is important in the study of management structures, which directly concerns normative aspects of economic competition, and provides the basis for topics such as industrial organization and economics of regulation. JSTOR ( October 2021) ( Learn how and when to remove this template message).Unsourced material may be challenged and removed. Please help improve this article by adding citations to reliable sources. This section needs additional citations for verification. Monopolies may be naturally occurring due to limited competition because the industry is resource intensive and requires substantial costs to operate (e.g., certain railroad systems). The government may also reserve the venture for itself, thus forming a government monopoly, for example with a state-owned company. Patents, copyrights, and trademarks are sometimes used as examples of government-granted monopolies. A government-granted monopoly 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 interest group. 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. In many jurisdictions, competition laws restrict monopolies due to government concerns over potential adverse effects. Monopolies can be established by a government, form naturally, or form by integration. Monopolies, monopsonies and oligopolies are all situations in which one or a few entities have market power and therefore interact with their customers (monopoly or oligopoly), or suppliers (monopsony) in ways that distort the 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. Ī monopoly may also have monopsony control of a sector of a market. A small business may still have the power to raise prices in a small industry (or market). Although monopolies may be big businesses, size is not a characteristic of a monopoly. In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices, which is associated with a decrease in social surplus. In economics, a monopoly is a single seller. The verb monopolise or monopolize refers to the process by which a company gains the ability to raise prices or exclude competitors. Monopolies are thus characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods, and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit. This contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly and duopoly which consists of a few sellers dominating a market. A monopoly (from Greek μόνος, mónos, 'single, alone' and πωλεῖν, pōleîn, 'to sell') is as described by Irving Fischer, a market with the "absence of competition", creating a situation where a specific person or enterprise is the only supplier of a particular thing.
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