A monopoly is when a single person or company has control of a market. In normal competition, each product is sold a few places. Since each company can be easily replaced by another, they all set lower prices to compete. But in a monopoly, there is only one place to get something.
You’ve probably heard of the board game, Monopoly. In the game, you want to own all the properties of a color or “have a monopoly” on that color. If no one else owns land in the area, there’s no competition on prices. You can charge a lot more. And if people want (or have) to be there they’ll just have to pay up.
The game focuses on owning land. But you can also have a monopoly on the sale of a single product.
Points to remember:
- The whole market is served by a single seller.
- The seller is able to maximize profits.
- The seller decides the price of the product.
- There are often high barriers to entry.
- One reason governments don’t really like monopolies is because they can affect product quality.
Here’s a little sprinkle of eCoinomic magic: Do you want to know how to create a monopoly without getting into trouble with the government? Shh, come in close now. **Looks left and right to make sure no one else is listening.** Create a new market! There are plenty of itches that aren’t being scratched. Think of a product or service that is not being offered yet, and get to work. By the time others start doing the same thing, you will have already had a head start establishing your brand!