what is a monopoly 
a monopoly is a market structure with a single seller or producer that assumes a dominant position in an industry or a sector monopolies are discouraged in free market economies because they stifle competition limit consumer substitutes and thus limit consumer choice in the united states antitrust legislation is in place to restrict monopolies ensuring that one business cannot control a market and use that control to exploit its customers investopedia jessica olahunderstanding a monopolya monopoly is characterized by a single company supplying a good or service a lack of competition within the market and no similar substitutes for the product being sold monopolies can dictate price changes and create barriers for competitors to enter the marketplace companies become monopolies by controlling the entire supply chain from production to sales through vertical integration or by buying competing companies in the market through horizontal integration and becoming the sole producer monopolies typically reap the benefit of economies of scale which is the ability to produce mass quantities at lower costs per unit types of monopoliesa pure monopoly is a single seller in a market or sector and high barriers to entry such as significant startup costs there are no substitutes for the product sold by the seller microsoft corporation was the first company to hold a pure monopoly position on personal computer operating systems as of may 2024 its desktop windows software still held a market share of more than 73 1multiple sellers in an industry sector with similar substitutes are defined as having monopolistic competition barriers to entry are low and the competing companies differentiate themselves through pricing and marketing efforts their offerings are not perfect substitutes as with visa and mastercard other examples of monopolistic competition include retail stores restaurants and hair salons a natural monopoly develops from reliance on unique raw materials technology or specialization companies with patents or extensive research and development costs like pharmaceutical companies are considered natural monopolies public monopolies such as the utility industry provide essential services and goods only one company commonly supplies energy or water to a region the monopoly is allowed and heavily regulated by government municipalities rates and rate increases are controlled pros and cons of a monopolymonopoly regulationsantitrust laws and regulations are in place to discourage monopolistic operations protect consumers and ensure an open market in 1890 the sherman antitrust act was passed by the u s congress to limit trusts a precursor to monopolies or groups of companies that conspired to fix prices this act dismantled monopolies including the standard oil company and the american tobacco company 2the clayton antitrust act of 1914 created rules for mergers and corporate directors it listed practices that would violate the sherman antitrust act the federal trade commission act created the federal trade commission ftc the ftc along with the antitrust division of the u s department of justice sets standards for business practices and enforces the two antitrust acts 3at tthe most consequential monopoly breakup in u s history was that of at t after controlling the nation s telephone service for decades as a government supported monopoly at t fell to antitrust laws in 1982 at t which had telephone lines that reached nearly every home and business in the u s was forced to divest itself of 22 local exchange service companies which were the main barrier to competition 4microsoftin 1994 microsoft was accused of using its significant market share in the personal computer operating systems business to prevent competition and maintain a monopoly authorities claimed that the company was using exclusionary and anticompetitive contracts to market its personal computer operating system software by these contracts microsoft has unlawfully maintained its monopoly of personal computer operating systems and has unreasonably restrained trade a federal district judge ruled in 1998 that microsoft was to be broken into two technology companies but the decision was later reversed on appeal by a higher court microsoft was free to maintain its operating system application development and marketing methods 5