of privatisation a monopoly may still arise Reforms to enhance competition Although state monopolies are sustained through legislative instruments, many major economies have seen efforts to reform the disproportionate market powers they sustain, to therefore enhance competition. This has been enacted through regulatory reforms (removing statutory restrictions to market competition) and structural reforms (including separating contestable elements of a state monopoly, and creating third party rights of access to natural monopolies). Across all levels of governmental jurisdiction, both structural and regulatory reforms have been preferred, as it forces all market participants (both state monopolies and private industry) to respond to competitive pressures, as opposed to legislated regulatory structures. This has been observed to result in more optimal outcomes for an economy, as resource allocation is no longer directed by legislative instruments or regulatory authorities. Despite these reform efforts to promote competitive markets, regulatory and structural reforms struggle to overcome the entrenched market dominance of state monopolies. This is resultant of advantages enjoyed by state monopolies, including first mover advantages. Advantages The following advantages, may happen or not: Governement monopolies tend to comply with law (tax compliance, environnemental law, safety regulations) Prices of a good or service might be stabler, or at a set price. No economical dead-weight in advertising Greater and stabler governement income, than with a state owned company in a free market No pressure to drive down costs (race to the bottom), which can be seen as posing bases for more ethical business Can take over a private monopoly judged harmful. Disadvantages Governement monopolies have traditional risks of usual monopolies: High prices can arise Abuse of market dominance See also Alcohol monopoly Coercive monopoly Crown corporation Salt commission Government-granted monopoly Monopoly Monopoly on violence Nationalization Natural monopoly Private police State monopoly capitalism References Market failure Monopoly (economics) Fiscal policy