Define monopoly and give an example from real life.

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The word “monopoly” refers to total control by a single corporation of a particular service or good, especially a service or good that is vital or extremely important in the conduct of day-to-day life on the part of the public at large. Thanks to federal laws (such as the 1890 Sherman Antitrust Act and the Clayton Act) and the development of certain technologies, examples of actual monopolies are virtually nonexistent in the United States, although government and private watchdogs remain vigilant against the possible emergence of a monopoly.

The classic example in US history involving a permissible monopoly involved the telecommunications company AT&T. For many decades, AT&T was permitted hold a monopoly over the nation’s telephone services. Until the introduction of cellular telephones during the 1980s, AT&T was permitted to have a monopoly over telephone services because it made no sense for a proliferation of individually owned telephone cables to be strung up all over the country. Telephone calls transited a single series of wires that were owned and operated by that one phone company. A consent decree was issued in 1956 that authorized the phone company to maintain monopolistic control over those wires. As alternative means of communicating via telephone were developed, it became increasingly difficult for AT&T to justify its demand for single control over the nation’s telecommunications. Antitrust suits filed by potential competitors and by the federal government ultimately resulted in 1984 with the monopoly’s forced breakup into what were called “Baby Bells,” after the moniker “Ma Bell” (the Bell Telephone Company preceded AT&T as the monopoly holder of phone services). The advent of wireless communications (cell phones) completely revolutionized the telecommunications industry and provided the final nail in the coffin of monopolistic control over telecommunications.

Today, the most problematic realm in which a monopoly could emerge involves the computing industry. Microsoft maintains such a dominant position in the personal computing sector that it has been a regular target of antitrust investigations by the US government and by the European Union. Only the existence and survival of Apple has prevented total market domination by Microsoft, with the latter controlling over two-thirds of the US and global marketplace.

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