Fro𝕴m Standard Oil to the tech giants of today, monopolies are deeply rooted in the history of American capitalism. While large companies have exploited their market power due to a lack of competition, there are some cases where mono🗹polies may benefit the consumer and, in turn, the wider economy.

Monopolies over a particular commodity, market, or aspect of production are considered good or economically advisable in cases where free-market competition would be economically inefficient. They may also be benefiꦯcial if the price to consumers is regulated, or high risk and high entry costs inhibit initial investment in a necessary sector.

Most often, history shows that monopolies usually function positively when there is government intervention. This may be through the government taking partial ownership of a single supplier for a commodity in order to keep costs to consumers to a necessary minimum. Taking such actions is in the public interest if the good in question is relatively inelastic or neceꦿssary, that is, without substitutes.

What Are Natural Monopolies?

Natural monopolies are often found in the market for public utilities or relatively high-cost sectors that deter 澳洲幸运5官方开奖结果体彩网:capital investment. A government may then support the total market share of a single corporation in providing water, electricity, or natural gas to its public. In doinꦇg so, ♏both government regulation of the price of a necessary good and a continuous supply are guaranteed, with external competition curtailed by the formation of a monopoly.

What Is the Role of Government-Sanctioned Monopoꦺlies?

Two examples of government-sanctioned monopolies in the United States are the American Telephone and Telegraph Corporation (AT&T) and♎ the United States Postal Service.

Prior to its mandated breakup into six subsidiary corporations in 1982, AT&T was the sole supplier of U.S. telecommunications. Similarly, the United States Postal Service has been the sole courier of standardized mail across the U.S since 1970.

Government-sanctioned𝔍 monopolies need not always be for reasons of economic efficiency or consumer price protection, however. Eighteen sta⛄tes operate legal monopolies of beer, wine, or spirits through government agencies at the wholesale level.

The reason for doing so is to regulate distribution in order to reduce alcohol consumption. These states are Alabama, Idaho, Iowa, Maine, Maryland, Michigan, Mississippi, Montana, New Hampshire, North Carolina, Ohio, Oregon, Pennsylvania, Utah, Vermont, Virginia, West Virginia, and Wyoming.

The Bottom Line

Monopolies are generally considered bad because they have vast control over one market, which is rarely in the best interests of the consumer. This is largely due to a lack of competition in the market, which allows the company to inflate prices knowing, that consumers have no other option.

Similarly, monopolies can result in poor-quality goods or services because there is little incentive to improve them for consumers. Furthermore, this often leads to a lack of innovation and efficiency.

However, there are times when monopolies can be good, such as when barriers of entry are too high, when inefficiency can be eliminated, or when prices can be regulated. In some cases, monopolies that are created in conjunction with a government can be beneficial to consumers.