Economists will tell you that there are multiple buyers and multiple sellers in every marketplace. This means that a marketplace requires competition. This competition allows prices to fluctuate in response to the current supply and demand of the marketplace. And for every product there are many substitutes, so if one particular product is too expensive, buyers can select a cheaper substitute product instead. But in this market with multiple buyers and multiple sellers, the consumer and supplier have an equal ability to influence the price of products and services.
In certain industries however, there is no competition and there are no substitutes. In a market where there is only one supplier of a particular good or service, the producer is able to control the price exclusively. This means that the consumer has no choice. The consumer cannot maximize their utility and they have no influence of the price of their goods.
A monopoly is a structure in the market where there is a single seller or producer for product. In this sense, a monopoly is when a single business is in fact the industry. Entry into a market where there is a monopoly is very restricted due to the high cost. There can also be impediments into this market from social, economic, or political means. A government might have a monopoly over an industry that it particularly needs to control like that of electricity. Sometimes one particular entity owns the exclusive rights for natural resources, and this bars any entry into the monopolistic industry. For example, in Saudi Arabia, the government controls the oil industry exclusively. A monopoly might also form with a particular company has a patent or copyright which prevent other people from entering into that market. For example, there was a company which of the patent on the product Viagra.
Monopolies are not good for consumers in a free-market country. A monopoly is an extreme form of a market structure. Perfect competition is a necessary component to a free-market country, and it has many buyers and many sellers. It also has many products that are similar in nature. Perfect competition also means that there are very few barriers in order to enter into a particular market. It also means the prices are dictated by supply and demand. But a company that owns a monopoly or monopolizes and industry takes away this form of free market economies. It creates barriers, it takes away the influence of supply and demand and it uses its leverage to alleviate competition.
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