What is monopolies?

Answer 1

What is monopoly?

Monopoly is the exclusive possession or controlover something.

Actually, that's not quite true. It doesn't have to be exclusive. It merely has to be dominating. That is, to have a monopoly of something doesn't mean you have to be the only one with it; it merely indicates that you have a very large portion of it, and are able to control most of the usage of that thing, including holding a severe influence over the usage of even the portion of the thing that you do not own. While this might sound confusing, it's actually rather simple: by virtue of owning most of thing X, you can very much restrict how any other person can use any thing X that they might own.

To be a little more clear here: someone (or something) has a monopoly on something when they control (at least) a very significant majority: 80% is a good threshold for considering a monopoly. What makes the monopoly effective is that since the monopolist owns so much of the item, they can set the price and distribution of the items for the entire market, while either ignoring or driving out of business other suppliers. A big characteristic of what makes a monopoly is that there is a limited supply of the item being monopolized (that is, other competitors can't simply out-produce the monopolist).

Example:

Let's use a some mineral X as an example. There are only so many known deposits of X, and there are significant costs associated with both searching for new deposits, and also buying the land, opening a mine, etc. Company A owns 90% of all the producing mines for X. Company B and Company C each own 5%. Now, in a "natural" market, where each company made say 1/3 the total items, and there was true competition between them, the price for X would be $5. Instead, since A owns a monopoly, several bad things can happen:

1. Company A can set the price for X to be $10. Since there is a limited supply of X, even if Company B & C set their price to $5, the other two companies can't meet demand at $5, so the vast majority of customers have to go to Company A and pay $10.
2. Company A can set the price to $3. Since it costs $4 to produce X, they lose money on every sale. However, no one will buy from B or C, since they have to charge $5 (they're smaller, and don't have the cash reserves that A has). Thus, quickly, B & C go out of business. A can now buy their bankrupt competition, and own 100% of the market for X.

There are quite a few other reasons why monopolies are generally considered a bad thing.

Answer 2

A monopoly is what every company/business wants but can be bad for society. Many democratic governments try to stop any company acheiving a monopoly in any product as it is the opposite of a competative market. You have a monopoly when you control all of a particular thing. Say, for example, you bought every gold mine in the world. You would now have a monopoly on gold and could name a really high price for it because if anyone wanted some they have no choice but to get it from you. Western societies try to prohibit monopolies to ensure that people pay a reasonable price for what they want to buy.

Answer 3

A company that controls prices and availability in an industry.

-Apex- :)

Answer 4

monopoly is a game