Give examples of monopoly market.

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Lorraine Caplan eNotes educator| Certified Educator

A monopoly exists when only one company can provide a product or service to consumers, with no competitors at all.  In the United States, monopolies that still exist are mostly, for example, gas, electricity, and water and sewerage companies. The telephone business was originally a monopoly as well, AT&T.  These were permitted to be monopolies because they had very high start-up costs, and the only way to attract investors was to guarantee that there would be no competition, hence a reasonably assured return on investment. Digging ditches and laying down pipes or putting up poles and stringing wire are costly endeavors, and it can take years and years for this investment to pay off.  If there had been competition, there was no way of knowing that all of this would ever pay off for a company, and it would have been difficult to attract investors. Of course, in exchange for being granted monopoly status, these companies had to submit to government regulation, the intent being to prevent consumers from being gouged by high rates.  Today, most utilities have been deregulated and compete, not with their infrastructure, but with the energy products that they sell. Thus consumers receive delivery of gas or electricity through lines that are still monopolistic, but they can choose the gas or electricity from a menu of purveyors.

Other kinds of monopolies do exist, for example, nationalist monopolies and patents. In some countries, the gas or oil industry is controlled by the state, and the state is the only provider of this product. No one else can be in the gas business, and the state sets the price.  A company that holds a patent has a monopoly on that product, for example, a pharmaceutical product or a technological device or operating system. This is why some drugs are so expensive. There is no competition for them, and the company can set whatever price it chooses. These are finite monopolies, though, since when the patent runs out, anyone may produce the drug, device, or system.