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Conditions where a monopoly existsįor a monopoly to exist, several of the conditions/situations below occur simultaneously: During the Soviet communist era and North Korea today, many more sectors had/have just one supplier compared to any capitalist economy. In centrally-controlled economies, monopolies are much more common. Companies can still meet consumer demand without creating a monopoly.īelieving that monopolies are examples of extreme cases of capitalism is a myth. Mergers and acquisitions are strictly regulated in Europe, North America, Japan and Australasia the aim being to make sure no single supplier becomes too dominant in a market. These laws came into force to protect consumers and prevent companies from gaining total control of a market. In most advanced economies and many emerging economies, monopolies are forced to divest assets to satisfy anti-monopoly (anti-trust) laws. A monopoly is a market structure with just a single seller who sells a unique product, faces no competition, and determines its price. Even defense suppliers that export generally have just one client in each nation. The United States, UK, France, Israel and Russia have many defense companies but just one buyer in their home country – the government (the military). Not to be confused with a monopsony, which relates to a single buyer of a product or service with many sellers – for example, the only buyer of fighter jets is the country’s air force. The word monopoly may refer to the situation in which there is only one supplier of a product or a service, or the supplier itself.
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Some people also include a market with just two or three suppliers – but that is not a ‘pure monopoly’. A monopoly is a supplier of a product or service that has no competitors – it is the sole provider in a market.