What's a monopoly?
A monopoly market is a market structure in which a single seller dominates the industry – a monopolist.
The seller sells a completely unique product, with restrictions on the entry of new companies into the market. He has the power to control the whole market and determine the supply and price of goods or services. Consequently, a monopoly market is a non-competitive market with no close substitutes for the monopolist’s products.
A monopoly is a rare market situation where only one company operates and offers goods or services to people. The monopoly sells less (in terms of quantity) than in a perfectly competitive market, but charges a higher price.
Examples of monopolies
Diamond market
Monopolies are rarely found in everyday life, because it’s complicated to create markets in a monopoly situation.
One example is the diamond industry, where one of the players, De Beers, once controlled 80% of the market. It had the power to control the price of diamonds, selling them in small quantities to keep prices consistently high. Today, this market is no longer a monopoly, with the arrival of new competitors.
Government-protected markets
Governments (and in particular the French government) can sometimes protect companies from competition in certain markets where monopolies exist.
EDF and SNCF, for example, were until recently in markets closed to competition, putting these companies in a monopoly situation. For more than 80 years, SNCF has been able to set market prices, or even choose to abandon some of its rail lines, without leaving them open to competition.
English translation of monopoly
The English translation of monopoly is“monopoly”.