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Exclusive control by someone or some group of the means of producing or selling a good or service

A monopoly (from Greek monos μόνος ["alone" or "single"] and polein πωλεῖν ["to sell"]) exists when a specific person or enterprise is the only supplier of a particular commodity. This contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly which consists of a few sellers dominating a market. Monopolies are thus characterized by a lack of economic competition to produce the good or service, a lack of viable substitute goods and the possibility of a high monopoly price well above the seller's marginal cost that leads to a high monopoly profit. The verb monopolize refers to the process by which a company gains the ability to raise prices or exclude competitors. In economics, a monopoly is a single seller. In law, a monopoly is a business entity that has significant market power, that is, the power to charge overly high prices. Although monopolies may be big businesses, size is not a characteristic of a monopoly. A small business may still have the power to raise prices in a small industry (or market).


Glossary: Monopoly, monopolist, by Percy L. Greaves Jr., Mises Made Easier, 1974
Definition of monopoly and monopolist, based on Mises' Human Action (1966) and Omnipotent Government (1944) and Greaves' Understanding the Dollar Crisis (1973)
These terms have two distinctly different meanings: (1) A state of affairs in which an individual or group of individuals has the exclusive control of one of the vital conditions of human survival. In this situation, the monopolist is the master and the rest are slaves. It is the pattern of the socialist state (see 'Socialism') and has no reference to a market economy. (2) A state of affairs in which an individual or a group of individuals has the exclusive control of the supply of a definite commodity or factor of production. In this sense, every market participant is a monopolist if the commodity or service he offers cannot be exactly duplicated by a competitor. Such a monopoly is of no importance unless market conditions permit the monopolist to charge monopoly prices (q.v.), which they rarely do without government interventionism (q.v.).


The Anatomy of Antitrust: An Interview With Dominick T. Armentano, by Dominick T. Armentano, Austrian Economics Newsletter, 1998
Discusses aspects of the United States v. Microsoft Corp case and related issues, such as product tying, exclusivity agreements, theories of compettion, price fixing, Robert Bork's views, government monopolies and Armentano's antitrust book
When Mises talks about monopoly, he says it occurs when the whole supply of a commodity is controlled by a single seller. Israel Kirzner uses the same language. So they seem to have the same position with respect to monopoly ... I think a better approach is the Rothbardian approach ... A legal restriction to enter a market is an example of monopoly power, but that can only be granted by the state. Once you consider legal restrictions, it becomes meaningful to talk about monopoly. You can talk about monopoly power and monopoly prices. You can talk about restriction of output and even consumer injury.
Barristers and Barriers: Sir Edward Coke and the Regulation of Trade [PDF], by Gary M. Anderson, Robert D. Tollison, Cato Journal, 1993
Examines Coke's impact on the regulation of the legal profession and argues that while he opposed royal grants of monopoly privileges, his efforts tended to enhance monopoly advantages of common law barristers
The common law courts consistently fought for the privilege to allocate monopoly rents to be granted to the common law courts. Coke was a leader of this effort. Finally, the common lawyers achieved a successful alliance with Parliament, and together those two groups sought and obtained a legal monopoly in the granting of monopoly privileges. ... The main difference between the regulations promulgated by the two branches of government was that the monarch tended to issue grants of monopoly privileges, or 'patents of monopoly,' to specific individuals, whereas Parliament produced numerous legal entry barriers which restricted competition in specific markets.
Benjamin Ricketson Tucker, Part 2, by Wendy McElroy, Freedom Daily, Sep 2007
Biographical essay on Benjamin Tucker from the first issue of Liberty until his death
Tucker introduced readers to a powerful class that robbed the average man with impunity: politicians and their associates. But how? He answered, "Monopoly." Specifically, theft occurred through "two great monopolies,—the monopoly of land and the monopoly of credit." The monopolies were created and maintained by the state, which allied with business against the common man. Freedom required opposing this alliance, especially in its monopoly over issuing money—that is, banking. Remove the power of the state and monopolies would fall, leaving individuals economically free.
Big Business and the Rise of American Statism, by Roy Childs, Reason, Feb 1971
Originally a speech given at the first convention of the Society for Individual Liberty, 15-16 Nov 1969
The NCF [National Civic Federation] sponsored legislation to promote the formation of "public utilities," a special privilege monopoly granted by the state, reserving an area of production to one company. Issuing a report on "Public Ownership of Public Utilities," the NCF established a general framework for regulatory laws, stating that utilities should be conducted by legalized independent commissions ... [S]eeing that the railroads were both submitting to and apparently profiting from regulation, the NCF's self-appointed job of "educating" municipal utilities corporations became much easier.
Big Pharma and Crony Capitalism, by Wendy McElroy, 9 Jul 2012
Examines the ways in which large pharmaceutical companies influence government agencies such as the Food and Drug Administration (FDA)
[A]ll prescription drugs ... continue to be dispensed only by state-licensed doctors and druggists who enjoy a monopoly privilege in medical care as the only legal drug dealers ... It is a privilege of which they are jealous. For example, the American Medical Association has a long history of persecuting competitors, such as midwives. As with all monopolies, quality suffers even as the cost to consumers soars. This is particularly true of drug costs, because the government's grant of a monopoly—namely, a drug patent—is such a long and expensive process that competitors to big pharma are shut out.
Blockading with Trade Restrictions, by Jim Powell, 27 Oct 2010
Explores the writings of Henry George in his book Protection or Free Trade (1879) offering advice to current waves of protectionism
George wrote Protection or Free Trade because he hated monopolies. They could be maintained only if there were government-enforced restrictions that prevented people from dealing with alternative suppliers. He concluded that the most effective antitrust policy was free trade—consumers and businesses able to shop the world for the best values. He explained why trade restrictions mainly harm nations that impose them: "Every tariff that raises prices for the encouragement of one industry must operate to discourage all other industries into which the products of that industry enter ..."
Related Topics: Free trade, Henry George, War
Book Note: Rothbard: Man, Economy, and State: A Treatise on Economic Principles [PDF], by Manuel S. Klausner, New York University Law Review, Jun 1963
Review of Rothbard's Man, Economy, and State with emphasis on areas of interest to lawyers
Of special interest to lawyers is Rothbard's thorough analysis of the theories of monopoly, monopoly price, and monopolistic competition. He points out that "despite the reams of literature on monopolies, very few economists have bothered to define monopoly." ... Rothbard dismisses other definitions of monopoly as "confused" or "inexpedient," and he adopts the original common law definition of monopoly as the only proper and meaningful one: "Monopoly is a grant of special privilege by the State, reserving a certain area of production to one particular individual or group."
The Challenge to the U.S. Postal Monopoly, 1839-1851 [PDF], by Kelly B. Olds, Cato Journal, 1995
Analysis of the operation of the U.S. Post Office in the 1840s, including estimates of subsidies to various groups, and discussion of the private competitors and the effects they had on the postal service
The Post Office's large hidden profits caused very high postal rates relative to the cost of transportation. ... it was in 1839 that the U.S. Post Office first came up against significant formal competition. Private companies deliver mail efficiently and at low rates. To defeat the private mail and express companies, Congress was forced to lower postage rates. Rates were lowered to an average of 6.3¢ per half-ounce letter in 1845. Private competition and postal reform agitation were temporarily checked, but did not cease. In 1851, Congress lowered postage further, to 3¢ per half-ounce letter.
The Death of Politics, by Karl Hess, Playboy, Mar 1969
Discusses libertarianism, contrasting it with both conservatism and modern liberalism, including specific policy differences
To suppose that anyone needs government protection from the creation of monopolies is to accept two suppositions: that monopoly is the natural direction of unregulated enterprise, and that technology is static. Neither, of course, is true. The great concentrations of economic power, which are called monopolies today, did not grow despite government's anti-monopolistic zeal. They grew, largely, because of government policies, such as those making it more profitable for small businesses to sell out to big companies rather than fight the tax code alone.
The 'economic liberalism' of Sir Edward Coke, by Murray N. Rothbard, Economic Thought Before Adam Smith, 1995
From chapter 10, "Mercantilism and freedom in England from the Tudors to the Civil War"; argues that Coke was not a sympathizer of laissez-faire but rather objected to the king (versus the Parliament) intervening in markets
[I]n the famous Statute of Monopolies, passed in 1623 and drafted largely by Coke, Parliament abolished royal grants of monopoly privilege, but explicitly reserved to itself the right to grant such privileges, which it soon proceeded to do. The statute also specifically exempted from abolition large categories of royal monopoly, including such industries as printing, gunpowder, and saltpeter, and the rights of 'corporations' such as London to prevent non-Londoners from engaging in trade within the city limits, or monopoly corporations engaged in foreign trade.
Related Topics: Edward Coke, Free trade
Government in Business, by Murray N. Rothbard, The Freeman, Sep 1956
Contrasts characteristics of government-run enterprises with those of privately operated businesses and counters the argument of running government "like a business"
Many people think these problems could be solved if only "government were run like a business." And so they advocate jacking up postal charges until the Post Office is "run at a profit." ... Government need not cut costs; it can either cut its service or simply raise prices. Government service is always a monopoly or semi-monopoly. Sometimes, as in the case of the Post Office, it is a compulsory monopoly—all competition is outlawed. If not outlawed, private competition is strangled by taxes to cover the operating deficits and raise capital for tax-exempt government operation.
The Great Lie of Modern Unions, by Wendy McElroy, 31 Oct 2013
Details the history of labor organizing, from the Knights of Labor in 1869 to the 1935 Wagner Act
These unions were handed the legal privilege of certification. That is, the union received government authorization as the sole representative of labor within a certain industry or business ... The monopoly union then prevented other labor groups and individuals from negotiating their own contracts ... The monopoly union also acted as an enforcement arm, which ensured that its members complied with contracts. The union prevented the wildcat strikes which were a significant problem; it punished unsanctioned boycotts, work slowdowns and the other labor tactics that had proven so effective in the past.
Related Topics: Labor, Unemployment, World War I
How Much Do You Know About Liberty? (a quiz), The Freeman, Jun 1996
A 20-question quiz (with answers) on various topics related to liberty in the history of the United States
7. What was the primary reason for the Sherman Antitrust Act? ... Contemporary and near-contemporary accounts suggest [it] was passed to provide political cover for the McKinley Tariff, enacted at nearly same time. Back then, many observers commented on the hypocrisy. For example, ... "We provide for high duties upon foreign imports for the protection of home industries ... In this way our politicians prove to the great combinations who furnish campaign disbursements ... their fidelity to monopolistic interests, while, by the penal statute, they assure the people that they are against trusts."
Libertarian Anarchism: Responses to Ten Objections, by Roderick T. Long, 6 Aug 2004
Transcript of informal talk given at the 2004 Mises University. First makes the case for anarchism and then responds to objections others have raised against it
What's wrong with a shoe monopoly? Suppose that I and my gang are the only ones that are legally allowed to manufacture and sell shoes ... [F]irst of all, there are incentive problems. If I'm the only person who has the right to make and sell shoes, you're probably not going to get the shoes from me very cheaply ... [T]here's also abuse-of-power issues. But, it's just not the incentive problem ... [E]ven if I'm doing my best, the quantity I make, the quality I make may not be best suited to satisfy people's preferences, and I have a hard time finding these things out.
The life and times of Murray N. Rothbard, by Jim Powell
Full title: The life and times of Murray N. Rothbard, who showed why private individuals can do just about everything that needs to be done
Lengthy biographical essay
Free markets were widely believed to degenerate into monopolies as big companies got bigger and forced little guys out of business. Rothbard countered that competition is far more pervasive than is commonly realized ... He insisted that the only meaningful definition of a monopoly is the traditional one, "a grant of special privilege by the State, reserving a certain area of production to one particular individual or group." He meant government barriers to entry, such as laws giving an electrical utility a monopoly or laws limiting the number of taxicabs in a city.
Lysander Spooner, Part 1, by Wendy McElroy, Freedom Daily, Oct 2005
Lengthy biographical and bibliographical essay; from Spooner's birth to 1850-1860, examining his writings on economics, money, banking, mail delivery and slavery
Through such measures, Spooner believed that Congress held a de facto and unlawful monopoly over the most important industry to the American economy—banking. He also believed that that monopoly infringed on the right of individual persons to contract in at least two ways ... In 1844, he founded the American Letter Mail Company ... At that time, the federal government was trying to establish and enforce a monopoly on the delivery of all mail other than newspapers. ... True to form, Spooner issued a pamphlet contesting the government's "right" to a monopoly on any aspect of the mail.
The Many Monopolies, by Charles W. Johnson, 24 Aug 2011
Describes four ways in which markets are distorted by government interventions, explains Benjamin Tucker's "Four Monopolies", examines five present-day monopolies and discusses Tucker's libertarian views
Legal mandates and government monopolies produce captive markets in which customers are artificially locked in to particular services or sellers that they wouldn't otherwise patronize because political requirements enforce the demand. For example, the car insurance market is shaped by laws requiring insurance and regulating the minimum service that must be purchased. Captive markets legally guarantee privileged companies access to a steady stock of customers, corralled by the threat of fines and arrest.
Monopolies versus the Free Market, Part 1, by Gregory Bresiger, Freedom Daily, Sep 2006
Contrasts state-backed monopolies or quasi-monopolies vs. regular businesses in a free market, with historical and current examples, and discusses antitrust laws
State enterprises with monopoly or quasi-monopoly powers can also draw on the inexhaustible powers of the government for tax dollars ... State monopolies have an infamous background. One thinks of the salt or vodka monopolies conferred on politically connected court favorites or of monopolies invoked by divine-rights monarchs from Charles I to Russian tsars to German governments ... German governments, both imperial and democratic, organized more than 2,100 legally sponsored cartels. And woe unto the person or group that tried to compete with the state-backed enterprises.
Monopoly and Aggression, by Sheldon Richman, The Goal Is Freedom, 19 Dec 2014
Argues that monopoly and aggression are intimately related and that intellectual property laws are currently the main monopolistic interventions
The Federal Trade Commission once charged the top few ready-to-eat breakfast cereal companies with monopolizing "the market." But what market? The FTC meant the market for ready-to-eat breakfast cereals. But that's not all that people eat or can eat for breakfast. If you define the relevant market to include bacon and eggs; oatmeal; ... breakfast burritos; and anything else ..., a "monopoly" in ready-to-eat cereals looks rather different. Even a single cereal seller (assuming no government privilege) could not price his product without taking into account what his rivals in other foods, and consumers, were doing.
Monopoly, Competition, and Educational Freedom, by Jacob G. Hornberger, Mar 2000
Discusses monopolies and competition in the religious, postal delivery and educational realms and criticizes a speech by Gary Becker about competition in religion and education
Historically, a monopoly was a legally protected special privilege to provide a specified good or service. Protection from what? From the competition of others. Sometimes the good or service would be provided by government itself. Other times it would be provided by a private person or company. In either event, the supplier was comforted by the government-issued guarantee that no one else would be permitted to compete by providing that particular good or service ... If a person dared to enter into competition, he faced arrest, fines, and imprisonment for violating the government's decree ...
The Myth of 19th-Century Laissez-Faire: Who Benefits Today?, by Roderick T. Long, 10 Jun 2013
Responds to questions posed by Michael Lind and E. J. Dionne Jr. regarding lack of actual libertarian countries or the supposedly "small government libertarian utopia" in the late 19th century
Benjamin Tucker identified the domination of business interests in the Gilded Age as grounded in a variety of state-imposed monopolies, stressing four in particular: [tariffs, money, patents and land] ... Alongside these, Tucker listed the monopolization of security services represented by the institution of the state itself ... Dionne's claim that in that era "monopolies were formed too easily" ignores historical research ... that the supposedly anti-business regulations of the Progressive era ... were actually lobbied for by the corporate elite, in order to prop up monopolies that could not survive in an unhampered market.
The Post Office as a Violation of Constitutional Rights, by Wendy McElroy, The Freeman, May 2001
Prompted by the announcement of the U.S. Postal Service eBillPay service (now discontinued), surveys the history of mail service vis-à-vis civil rights, from colonial days to the present
The USPS is a government monopoly accustomed to operating at public expense. ... Many people consider the main cost to be the inefficiency and expense wrought by the absence of competition. ... The history of the USPS suggests something different ... It chronicles centuries of civil-rights violations that began at the very birth of a national postal system and that have nothing to do with providing a service. Rather, the USPS promoted and protected the interests of those in power. In asserting the monopoly that allows it to do so, it has been indifferent or hostile to providing the best service at the lowest price.
The Production of Security, by Gustave de Molinari, Journal des économistes, Feb 1849
Questions whether the provision of security to citizens should be an exception to the economic principle of free competition, delving into arguments favoring monopolistic and communistic government and concluding with a hypothetical free market example
Suppose that a man or a group of men succeed in having the exclusive production and sale of salt assigned to themselves. It is apparent that this man or group could arise the price of this commodity well above its value, well above the price it would have under a regime of free competition. One will then say that this man or this group possesses a monopoly ... But it is obvious that the consumers will not consent freely to paying the abusive monopoly surtax. It will be necessary to compel them to pay it, and in order to compel them, the employment of force will be necessary. Every monopoly necessarily rests on force.
Schumpeter, Joseph (1883-1950), by Thomas M. Humphrey, The Encyclopedia of Libertarianism, 15 Aug 2008
Biographical and bibliographical essay
As for monopolistic firms and monopoly profits, they bothered Schumpeter not at all. He thought that monopolies, unless protected by government, are short-lived, inherently self-destroying, and require no antitrust legislation. Their high profits attract the very rivals and producers of substitute products that undercut them. For the same reason, he regarded antitrust laws aimed at breaking up large, non-monopolistic firms as ill-advised ... [T]he very existence of R&D departments indicates that big firms realize they must continually innovate to stay alive.
Spooner, Lysander (1808-1881), by Randy Barnett, The Encyclopedia of Libertarianism, 15 Aug 2008
Biographical essay
In 1844, he founded the American Letter Mail Company to contest the U.S. Post Office's monopoly on the delivery of first class mail. Postal rates in that period were notoriously high, and several companies arose to challenge the government's monopoly. ... Spooner vigorously defended his action with a lengthy pamphlet titled 'The Unconstitutionality of the Laws of Congress, Prohibiting Private Mails' (1844). Unfortunately, this time he was up against a more intransigent foe. Although Spooner's mail company was successful commercially, legal challenges by the government soon exhausted his financial resources ...
Stop Those Who Would Stop Uber, by Sheldon Richman, 11 Nov 2014
Explains how the Uber and Lyft services work and describes a typical local government reaction when Uber started offering its service in Little Rock, Arkansas
[An] innovator ... disturbs the regulatory landscape where protected firms have long settled in safely and comfortably ... No wonder the regulation-spawned monopolies are upset ... The only losers from thwarting Uber are riders, who must suffer the inefficiency and backwardness of the local monopoly, and would-be drivers who can't break into the business because of that protectionist, interest-ridden system. Did you know New York City had fewer taxi licenses (medallions) in 2012 than in the late 1930s? ... You were taught monopolies are bad, right? Apparently not government-created monopolies.
Related Topics: Arkansas, Transportation
Toying with the Free Market, by Sheldon Richman, Freedom Daily, Dec 1998
Discusses the 1998 Toys "R" Us restructuring announcement and the 1996 Federal Trade Commission complaint that the firm had engaged in monopolistic practices
[I]n 1996, the Federal Trade Commission complained that Toys "R" Us had engaged in monopolistic practices in order to keep prices high ... [T]he chain was accused of pressuring top toy manufacturers to stop selling their popular products to discounters ... [C]onsumers don't seem much bothered by a firm labeled monopolistic ... They go about their business, buying the products they want and ignoring the products they don't want. No consumer has stepped forward to complain that agents of Toys "R" Us forced him into the store and compelled him to buy a Barbie doll or Star Wars action figure.
Who Owns the Internet?, by Tim Swanson, Mises Daily, 4 May 2006
Explains how and why "net neutrality" proposals came about, monopolistic tendencies, comparisons to natural resources and others held in common, and how variable pricing has been used elsewhere to solve similar problems
The only reason AT&T ... and other incumbents have the large user bases they currently do is because they were granted geographic monopolies ... Throughout much of the country, individuals, families and companies have usually only one or two choices for accessing the Internet: through the cable company or the telephone company. Similar to utilities such as water and electricity, the reason for this is that the State intervened and gave certain companies a geographic monopoly for offering these services. This is misleading and a sham for it alone has put content providers in the bind ...


The Kirznerian Way: An Interview with Israel M. Kirzner, by Israel Kirzner, Austrian Economics Newsletter, 1997
Topics discussed include Ludwig von Mises, the Austrian School, equilibrium, entrepreneurship, capital, business cycle theory, time preference, Hayek, Lachmann and Rothbard
KIRZNER: ... Ordinarily, the ownership of a resource provides value to its owner only to the extent he is prepared to put that resource to use ... The only possible exception is where the entire supply of a scarce resource, for which there are no substitutes, happens to be in the hands of a single seller. It may indeed be the case that the interests of the resource owner may be counter to that of consumers ... [Mises] didn't think it was an important case, but he did draw attention to it. He did not use this exceptional case to argue for controls over monopolies.


Anti-Trust and Monopoly, by Dominick T. Armentano, Ron Paul, 13 Jul 1983
A conversation with Ron Paul, hosted by Roger Ream, with guest Prof. Dominick Armentano

The introductory paragraph uses material from the Wikipedia article "Monopoly" as of 30 Oct 2018, which is released under the Creative Commons Attribution-Share-Alike License 3.0.