LeoGlossary: Monopoly

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When a dominant position is achieved in an industry or sector, to the exclusion of viable competitors.

These tend to lead to increased pricing along with a reduction in quality. It is something that free trade nations discourage.

Many countries have laws designed to prevent the ongoing success of a monopoly. Throughout history, governments broke them up, forcing competition into the industry. The main reason is because consumers lack choice when monopolies exist.

Characteristics

The five characteristics of a monopoly:

  • price maker
  • profit maximizer
  • high barriers to entry
  • single seller
  • price discrimination

General:

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