A monopoly is a market structure in which there is only one supplier of a particular good or service. In a monopoly, the single supplier (called the monopolist) has complete control over the price and quantity of the good or service being supplied.
There are several characteristics that define a monopoly:
- Single seller: As mentioned above, a monopoly is characterized by a single supplier of a particular good or service. This means that there is no competition in the market, and the monopolist has complete control over the price and quantity of the good or service being supplied.
- High barriers to entry: Monopolies often have high barriers to entry, which makes it difficult for new firms to enter the market and compete with the existing monopolist. These barriers can be economic, legal, or technological in nature.
- Unique product: A monopolist often provides a unique product or service that is not readily available from other suppliers. This makes it difficult for customers to switch to a different supplier if they are unhappy with the price or quality of the product or service being offered.
Examples of monopolies include utilities such as water, electricity, and natural gas, as well as government-granted monopolies such as the U.S. Postal Service.