For the board game, see Monopoly (board game)
A monopoly (from the Greek words "Mono," meaning "Singular" and "Poly," meaning "plentiful") is a single firm that effectively has no competitors in its market. The monopoly may then charge consumers a price that exceeds its marginal cost, but only in situations where the monopoly good does not have close substitutes. Monopolies producing goods with close substitutes may be monopolies in their own narrow market, but would not be able to enjoy the market power typically associated with monopolies.
In the United States, as a result of the Sherman Antitrust Act of 1890 and subsequent legislation, monopolization is illegal; more specifically,
- While it is not illegal to have a monopoly position in a market, the antitrust laws make it unlawful to maintain or attempt to create a monopoly through tactics that either unreasonably exclude firms from the market or significantly impair their ability to compete.
Monopolies then to thwart wage growth.
The word monopoly is one that has undergone a transformation over the years. During the American Revolution, monopolies were recognized not just to be a single entity with a unitary market position. Monopolies were, such as the East India Company, coupled with the force of law preventing entrants from appearing. This legal advantage is what cemented their monopolist position. Lord Coke described monopolies this way:
- An institution or allowance by the king, by his grant, commission, or otherwise, to any persons or corporations, of or for the sole buying, selling, making, working or using every thing, whereby any person or corporations are sought to be restrained of any freedom or liberty that they had before, or hindered in their lawful trade.
Hawkins, who worked with Coke, had a similar definition:
- A monopoly is an allowance by the king to a particular person or persons of the sole buying, selling, making, working, or using of any thing, whereby the subject in general is restrained from the freedom of manufacturing or trading which he had before.
Under the original definition of a monopoly, which involved a legally binding and enforceable grant of exclusivity, a company such as Microsoft or Standard Oil would not apply. It should be noted that the new definition of a monopoly is much more favorable to Big Government interests.
- Maintaining or Creating a Monopoly, U. S. Federal Trade Commission website
- A Dictionary of Law: Consisting of Judicial Definitions and Explanations of Words, Phrases, and Maxims, and an Exposition of the Principles of Law
- The Chicago Daily News Almanac and Year Book for 1912
- A Treatise of the Pleas of the Crown, William Hawkins, 1716