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In economics, a monopoly (from Greek monos / μονος (alone or single) + polein / πωλειν (to sell)) exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it.[1] Monopolies are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.[2] The verb "monopolize" refers to the process by which a firm gains persistently greater market share than what is expected under perfect competition.

A monopoly must be distinguished from monopsony, in which there is only one buyer of a product or service ; a monopoly may also have monopsony control of a sector of a market. Likewise, a monopoly should be distinguished from a cartel (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Monopolies can form naturally or through vertical or horizontal mergers. A monopoly is said to be coercive when the monopoly firm actively prohibits competitors from entering the field.

In many jurisdictions, competition laws place specific restrictions on monopolies. Holding a dominant position or a monopoly in the market is not illegal in itself, however certain categories of behavior can, when a business is dominant, be considered abusive and therefore be met with legal sanctions. A government-granted monopoly or legal monopoly, by contrast, is sanctioned by the state, often to provide an incentive to invest in a risky venture or enrich a domestic interest group. The government may also reserve the venture for itself, thus forming a government monopoly.


Market structures

In economics, monopoly is a pivotal area to the study of market structures, which directly concerns normative aspects of economic competition, and sets the foundations for fields such as industrial organization and economics of regulation. There are four basic types of market structures under traditional economic analysis: perfect competition, monopolistic competition, oligopoly and monopoly. A monopoly is a market structure in which a single supplier produces and sells the product. If there is a single seller in a certain industry and there are no close substitutes for the goods being produced, then the market structure is that of a "pure monopoly". Sometimes, there are many sellers in an industry and/or there exist many close substitutes for the goods being produced, but nevertheless firms retain some market power. This is called monopolistic competition, whereas in oligopoly the main theoretical framework revolves around firm's strategic interactions.

In general, the main results from this theory compare price-fixing methods across market structures, analyze the impact of a certain structure on welfare, and play with different variations of technological/demand assumptions in order to assess its consequences on the abstract model of society. Most economic textbooks follow the practice of carefully explaining the perfect competition model, only because of its usefulness to understand "departures" from it (the so called imperfect competition models).

The boundaries of what constitutes a market and what doesn't, is a relevant distinction to make in economic analysis. In a general equilibrium context, a good is a specific concept entangling geographical and time-related characteristics (grapes sold in October 2009 in Moscow is a different good from grapes sold in October 2009 in New York). Most studies of market structure relax a little their definition of a good, allowing for more flexibility at the identification of substitute-goods. Therefore, one can find an economic analysis of the market of grapes in Russia, for example, which is not a market in the strict sense of general equilibrium theory.


  • Single Seller: In a monopoly there is one seller of the monopolized good who produces all the output.[3] Therefore, the whole market is being served by a single firm, and for practical purposes, the firm is the same as the industry. In a competitive market (that is, a market with perfect competition) there are an infinite number of sellers each producing an infinitesimally small quantity of output.
  • Market Power: Market Power is the ability to affect the terms and conditions of exchange so that the price of the product is set by the firm (price is not imposed by the market as in perfect competition).[4][5] Although a monopoly's market power is high it is still limited by the demand side of the market. A monopoly faces a negatively sloped demand curve not a perfectly inelastic curve. Consequently, any price increase will result in the loss of some customers.

Sources of monopoly power

Monopolies derive their market power from barriers to entry - circumstances that prevent or greatly impede a potential competitor's entry into the market or ability to compete in the market. There are three major types of barriers to entry; economic, legal and deliberate.[6]

  • Economic Barriers: Economic barriers include economies of scale, capital requirements, cost advantages and technological superiority.[7]
Economies of scale: Monopolies are characterized by declining costs over a relatively large range of production.[8] Declining costs coupled with large start up costs give monopolies an advantage over would be competitors. Monopolies are often in a position to cut prices below a new entrant's operating costs and drive them out of the industry.[8] Further the size of the industry relative to the minimum efficient scale may limit the number of firms that can effectively compete within the industry. If for example the industry is large enough to support one firm of minimum efficient scale then other firms entering the industry will operate at a size that is less than MES meaning that these firms cannot produce at an average cost that is competitive with the dominant industry.
Capital requirements: Production processes that require large investments of capital, or large research and development costs or substantial sunk costs limit the number of firms in an industry.[9] Large fixed costs also make it difficult for a small firm to enter an industry and expand.[10]
Technological Superiority: A monopoly may be better able to acquire, integrate and use the best possible technology in producing its goods while entrants do not have the size or fiscal muscle to use the best available technology.[8] In plain English one large firm can sometimes produce goods cheaper than several small firms.[11]
No Substitute Goods:A monopoly sells a good for which there is no close substitutes. The absence of substitutes makes the demand for the good relatively inelastic enabling monopolies to extract positive profits.
  • Control of Natural Resources: A prime source of monopoly power is the control of resources that are critical to the production of a final good.
  • Legal Barriers: Legal rights can provide opportunity to monopolize the market in a good. Intellectual property rights, including patents and copyrights, give a monopolist exclusive control over the production and selling of certain goods. Property rights may give a firm the exclusive control over the materials necessary to produce a good.
  • Deliberate Actions: A firm wanting to monopolize a market may engage in various types of deliberate action to exclude competitors or eliminate competition. Such actions include collusion, lobbying governmental authorities, and force.

In addition to barriers to entry and competition, barriers to exit may be a source of market power. Barriers to exit are market conditions that make it difficult or expensive for a firm to leave the market. High liquidation costs are a primary barrier to exit.[12] Market exit and shutdown are separate events. The decision whether to shut down or operate is not affected by exit barriers. A firm will shut down if price falls below minimum average variable costs.

Monopoly versus competitive markets

While monopoly and perfect competition mark the extremes of market structures[13] there are many point of similarity. The cost functions are the same.[14] Both monopolies and perfectly competitive firms minimize cost and maximize profit. The shutdown decisions are the same. Both are assumed to face perfectly competitive factors markets. There are distinctions, some of the more important of which are as follows:

Market Power - market power is the ability to control the terms and condition of exchange. Specifically market power is the ability to raise prices without losing all one's customers to competitors. Perfectly competitive (PC) firms have zero market power when it comes to setting prices. All firms in a PC market are price takers. The price is set by the interaction of demand and supply at the market or aggregate level. Individual firms simply take the price determined by the market and produce that quantity of output that maximize the firm's profits. If a PC firm attempted to raise prices above the market level all its "customers" would abandon the firm and purchase at the market price from other firms. A monopoly has considerable although not unlimited market power. A monopoly has the power to set prices or quantities although not both.[15] A monopoly is a price maker.[16] The monopoly is the market[17] and prices are set by the monopolist based on his circumstances and not the interaction of demand and supply. The two primary factors determining monopoly market power are the firm's demand curve and its cost structure.[18]

Product differentiation: There is zero product differentiation in a perfectly competitive market. Every product is perfectly homogeneous and a perfect substitute. With a monopoly there is high to absolute product differentiation in the sense that there is no available substitute for a monopolized good. The monopolist is the sole supplier of the good in question.[19] A customer either buys from the monopolist on her terms or does without.

Number of competitors: PC markets are populated by an infinite number of buyers and sellers. Monopoly involves a single seller.[19]

Barriers to Entry - Barriers to entry are factors and circumstances that prevent entry into market by would be competitors and impediments to competition that limit new firm’s from operating and expanding within the market. PC markets have free entry and exit. There are no barriers to entry, exit or competition. Monopolies have relatively high barriers to entry. The barriers must be strong enough to prevent or discourage any potential competitor from entering the market.

PED; the price elasticity of demand is the percentage change in demand caused by a one percent change in relative price. A successful monopoly would face a relatively inelastic demand curve. A low coefficient of elasticity is indicative of effective barriers to entry. A PC firm faces what it perceives to be perfectly elastic demand curve. The coefficient of elasticity for a perfectly competitive demand curve is infinite.

Excess Profits- Excess or positive profits are profit above the normal expected return on investment. A PC firm can make excess profits in the short run but excess profits attract competitors who can freely enter the market and drive down prices eventually reducing excess profits to zero.[20] A monopoly can preserve excess profits because barriers to entry prevent competitors from entering the market.

Profit Maximization - A PC firm maximizes profits by producing where price equals marginal costs. A monopoly maximizes profits by producing where marginal revenue equals marginal costs.[21] The rules are equivalent. The demand curve for a PC firm is perfectly elastic - flat. The demand curve is identical to the average revenue curve and the price line. Since the average revenue curve is constant the marginal revenue curve is also constant and equals the demand curve, Average revenue is the same as price (AR = TR/Q = P x Q/Q = P). Thus the price line is also identical to the demand curve. In sum, D = AR = MR = P.

P-Max quantity, price and profit: if a monopolist took over a perfectly competitive industry he would raise prices cut production and realize positive economic profits.[22]

The most significant distinction between a PC firm and a monopoly is that the monopoly faces a downward sloping demand curve rather than the "perceived" perfectly elastic curve of the PC firm.[23] Practically all the variations above mentioned relate to this fact. If there is a downward sloping demand curve then by necessity there is a distinct marginal revenue curve. The implications of this fact are best made manifest with a linear demand curve, Assume that the inverse demand curve is of the form x = a - by. Then the total revenue curve is TR = ay - by2 and the marginal revenue curve is thus MR = a - 2by. From this several things are evident. First the marginal revenue curve has the same y intercept as the inverse demand curve. Second the slope of the marginal revenue curve is twice that of the inverse demand curve. Third the x intercept of the marginal revenue curve is half that of the inverse demand curve. What is not quite so evident is that the marginal revenue curve lies below the inverse demand curve at all points.[23] Since all firms maximize profits by equating MR and MC it must be the case that at the profit maximizing quantity MR and MC are less than price which further implies that a monopoly produces less quantity at a higher price than if the market were perfectly competitive.

A company with a monopoly does not undergo price pressure from competitors, although it may face pricing pressure from potential competition. If a company raises prices too high, then others may enter the market if they are able to provide the same good, or a substitute, at a lower price.[24] The idea that monopolies in markets with easy entry need not be regulated against is known as the "revolution in monopoly theory".[25]

A monopolist can extract only one premium, and getting into complementary markets does not pay. That is, the total profits a monopolist could earn if it sought to leverage its monopoly in one market by monopolizing a complementary market are equal to the extra profits it could earn anyway by charging more for the monopoly product itself. However, the one monopoly profit theorem does not hold true if customers in the monopoly good are stranded or poorly informed, or if the tied good has high fixed costs.

A pure monopoly follows the same economic rationality of firms under perfect competition, i.e. to optimize a profit function given some constraints. Under the assumptions of increasing marginal costs, exogenous inputs' prices, and control concentrated on a single agent or entrepreneur, the optimal decision is to equate the marginal cost and marginal revenue of production. Nonetheless, a pure monopoly can -unlike a competitive firm- alter the market price for her own convenience: a decrease in the level of production results in a higher price. In the economics' jargon, it is said that pure monopolies "face a downward-sloping demand". An important consequence of such behavior is worth noticing: typically a monopoly selects a higher price and lower quantity of output than a price-taking firm; again, less is available at a higher price.[26]

There are important points for one to remember when considering the monopoly model diagram (and its associated conclusions) displayed here. The result that monopoly prices are higher, and production output lower, than a competitive firm follow from a requirement that the monopoly not charge different prices for different customers. That is, the monopoly is restricted from engaging in price discrimination (this is called first degree price discrimination, where all customers are charged the same amount). If the monopoly were permitted to charge individualized prices (this is called third degree price discrimination), the quantity produced, and the price charged to the marginal customer, would be identical to a competitive firm, thus eliminating the deadweight loss; however, all gains from trade (social welfare) would accrue to the monopolist and none to the consumer. In essence, every consumer would be just indifferent between (1) going completely without the product or service and (2) being able to purchase it from the monopolist.

As long as the price elasticity of demand for most customers is less than one in absolute value, it is advantageous for a firm to increase its prices: it then receives more money for fewer goods. With a price increase, price elasticity tends to rise, and in the optimum case above it will be greater than one for most customers.

Monopoly and efficiency

Surpluses and deadweight loss created by monopoly price setting

According to the standard model,[citation needed] in which a monopolist sets a single price for all consumers, the monopolist will sell a lower quantity of goods at a higher price than would firms under perfect competition. Because the monopolist ultimately forgoes transactions with consumers who value the product or service more than its cost, monopoly pricing creates a deadweight loss referring to potential gains that went neither to the monopolist or to consumers. Given the presence of this deadweight loss, the combined surplus (or wealth) for the monopolist and consumers is necessarily less than the total surplus obtained by consumers under perfect competition. Where efficiency is defined by the total gains from trade, the monopoly setting is less efficient than perfect competition.

It is often argued that monopolies tend to become less efficient and innovative over time, becoming "complacent giants", because they do not have to be efficient or innovative to compete in the marketplace. Sometimes this very loss of psychological efficiency can raise a potential competitor's value enough to overcome market entry barriers, or provide incentive for research and investment into new alternatives. The theory of contestable markets argues that in some circumstances (private) monopolies are forced to behave as if there were competition because of the risk of losing their monopoly to new entrants. This is likely to happen where a market's barriers to entry are low. It might also be because of the availability in the longer term of substitutes in other markets. For example, a canal monopoly, while worth a great deal in the late eighteenth century United Kingdom, was worth much less in the late nineteenth century because of the introduction of railways as a substitute.

Natural monopoly

A natural monopoly is a firm which experiences increasing returns to scale over the relevant range of output.[27] A natural monopoly occurs where the average cost of production “declines throughout the relevant range of product demand.” The relevant range of product demand is where the average cost curve is below the demand curve.[28] When this situation occurs it is always cheaper for one large firm to supply the market than multiple smaller firms, in fact, absent government intervention in such markets will naturally evolve into a monopoly. An early market entrant who takes advantage of the cost structure and can expand rapidly can exclude smaller firms from entering and can drive or buy out other firms. A natural monopoly suffers from the same inefficiencies as any other monopoly. Left to its own devices a profit seeking natural monopoly will produce where marginal revenue equals marginal costs. Regulation of natural monopolies is problematic. Breaking up such monopolies is counter productive[citation needed]. The most frequently used methods dealing with natural monopolies is government regulations and public ownership. Government regulation generally consists of regulatory commissions charged with the principal duty of setting prices.[29] To reduce prices and increase output regulators often use average cost pricing. Under average cost pricing the price and quantity are determined by the intersection of the average cost curve and the demand curve.[30] This pricing scheme eliminates any positive economic profits since price equals average cost. Average cost pricing is not perfect. Regulators must estimate average costs. Firms have a reduced incentive to lower costs. And regulation of this type has not been limited to natural monopolies.[30]

Government-granted monopoly

A government-granted monopoly (also called a "de jure monopoly") is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of government enforcement. Copyright, patents and trademarks are examples of government-granted monopolies.

Breaking up monopolies

When monopolies are not broken through the open market, sometimes a government will step in, either to regulate the monopoly, turn it into a publicly owned monopoly environment, or forcibly break it up (see Antitrust law and trust busting). Public utilities, often being naturally efficient with only one operator and therefore less susceptible to efficient breakup, are often strongly regulated or publicly owned. AT&T and Standard Oil are debatable examples of the breakup of a private monopoly: When AT&T was broken up into the "Baby Bell" components, MCI, Sprint, and other companies were able to compete effectively in the long distance phone market.


The existence of a very high market share does not always mean consumers are paying excessive prices since the threat of new entrants to the market can restrain a high-market-share firm's price increases. Competition law does not make merely having a monopoly illegal, but rather abusing the power a monopoly may confer, for instance through exclusionary practices.

First it is necessary to determine whether a firm is dominant, or whether it behaves "to an appreciable extent independently of its competitors, customers and ultimately of its consumer."[31] As with collusive conduct, market shares are determined with reference to the particular market in which the firm and product in question is sold.

Under EU law, very large market shares raises a presumption that a firm is dominant,[32] which may be rebuttable.[33] If a firm has a dominant position, then there is "a special responsibility not to allow its conduct to impair competition on the common market".[34] The lowest yet market share of a firm considered "dominant" in the EU was 39.7%.[35]

Certain categories of abusive conduct are usually prohibited under the country's legislation, though the lists are seldom closed.[36] The main recognized categories are:

Despite wide agreement that the above constitute abusive practices, there is some debate about whether there needs to be a causal connection between the dominant position of a company and its actual abusive conduct. Furthermore, there has been some consideration of what happens when a firm merely attempts to abuse its dominant position.

Historical monopolies

The term "monopoly" first appears in Aristotle's Politics, wherein Aristotle describes Thales of Miletus' cornering of the market in olive presses as a monopoly (μονοπωλίαν).[37][38]

Common salt (sodium chloride) historically gave rise to natural monopolies. Until recently, a combination of strong sunshine and low humidity or an extension of peat marshes was necessary for winning salt from the sea, the most plentiful source. Changing sea levels periodically caused salt "famines" and communities were forced to depend upon those who controlled the scarce inland mines and salt springs, which were often in hostile areas (the Sahara desert) requiring well-organized security for transport, storage, and distribution. The "Gabelle", a notoriously high tax levied upon salt, played a role in the start of the French Revolution, when strict legal controls were in place over who was allowed to sell and distribute salt.

Robin Gollan argues in The Coalminers of New South Wales that anti-competitive practices developed in the Newcastle coal industry as a result of the business cycle. The monopoly was generated by formal meetings of the local management of coal companies agreeing to fix a minimum price for sale at dock. This collusion was known as "The Vend." The Vend collapsed and was reformed repeatedly throughout the late nineteenth century, cracking under recession in the business cycle. "The Vend" was able to maintain its monopoly due to trade union support, and material advantages (primarily coal geography). In the early twentieth century as a result of comparable monopolistic practices in the Australian coastal shipping business, the vend took on a new form as an informal and illegal collusion between the steamship owners and the coal industry, eventually going to the High Court as Adelaide Steamship Co. Ltd v. R. & AG.[39]

Examples of legal (and or) illegal monopolies

How to counter monopolies?

According to professor Milton Friedman, laws against monopolies cause more harm than good, but unnecessary monopolies should be countered by removing tariffs and other regulation that upholds monopolies.

A monopoly can seldom be established within a country without overt and covert government assistance in the form of a tariff or some other device. It is close to impossible to do so on a world scale. The De Beers diamond monopoly is the only one we know of that appears to have succeeded. - - In a world of free trade, international cartels would disappear even more quickly.[45]

On the other hand, professor Steve H. Hanke believes that although private monopolies are more efficient than public ones, often by factor two, sometimes private natural monopolies, such as local water distribution, should be regulated (not prohibited) through, e.g., price auctions[46].

See also

Notes and references

  1. ^ Milton Friedman (2002). "VIII: Monopoly and the Social Responsibility of Business and Labor" (paperback). Capitalism and Freedom (40th anniversary edition ed.). The University of Chicago Press. pp. 208. ISBN 0-226-26421-1. 
  2. ^ Blinder, Alan S; William J Baumol and Colton L Gale (June 2001). "11: Monopoly" (paperback). Microeconomics: Principles and Policy. Thomson South-Western. pp. 212. ISBN 0-324-22115-0. "A pure monopoly is an industry in which there is only one supplier of a product for which there are no close substitutes and in which is very difficult or impossible for another firm to coexist" 
  3. ^ Binger, B & Hoffman, E.: Microeconomics with Calculus, 2nd ed. p 391 Addison-Wesley 1998.
  4. ^ Png, Managerial Economics (Blackwell 1999)
  5. ^ Krugman & Wells: Microeconomics 2d ed. Worth 2009
  6. ^ Goodwin, Nelson, Ackerman, & Weissskopf, Microeconomics in Context 2d ed. (Sharpe 2009) at 307&08.
  7. ^ Samuelson & Marks, Managerial Economics 4th ed. (Wiley 2003) at 365-66.
  8. ^ a b c Nicholson & Snyder, Intermediate Microeconomics (Thomson 2007) at 379.
  9. ^ Samuelson & Marks, Managerial Economics 4th ed. (Wiley 2003) at 365.
  10. ^ Goodwin, Nelson, Ackerman, & Weissskopf, Microeconomics in Context 2d ed. (Sharpe 2009) at 307.
  11. ^ Ayers & Collinge, Microeconomics (Pearson 2003) at 238.
  12. ^ Png, I: Managerial Economics p. 271 Blackwell 1999 ISBN 1-55786-927-8
  13. ^ Png, I: Managerial Economics p. 268 Blackwell 1999 ISBN 1-55786-927-8
  14. ^ Negbennebor, A: Microeconomics, The Freedom to Choose CAT 2001
  15. ^ Hirschey, M, Managerial Economics. p. 412 Dreyden 2000.
  16. ^ Melvin & Boyes, Microeconomics 5th ed. (Houghton Mifflin 2002) 239
  17. ^ Pindyck, R & Rubinfeld, D: Microeconomics 5th ed. p.328 Prentice-Hall 2001
  18. ^ Varian, H.: Microeconomic Analysis 3rd ed. p. 233. Norton 1992.
  19. ^ a b Hirschey, M, Managerial Economics. p. 426 Dreyden 2000.
  20. ^ Pindyck, R & Rubinfeld, D: Microeconomics 5th ed. p. 333 Prentice-Hall 2001.
  21. ^ Varian, H: Microeconomic Analysis 3rd ed. p. 235 Norton 1992.
  22. ^ Pindyck, R & Rubinfeld, D: Microeconomics 5th ed. p. 370 Prentice-Hall 2001.
  23. ^ a b Binger, B & Hoffman, E.: Microeconomics with Calculus, 2nd ed. Addison-Wesley 1998.
  24. ^ Depken, Craig (November 23, 2005). "10". Microeconomics Demystified. McGraw Hill. pp. 170. ISBN 0071459111. 
  25. ^ The revolution in monopoly theory, by Glyn Davies and John Davies. Lloyds Bank Review, July 1984, no. 153, p. 38-52.
  26. ^ Levine, David; Michele Boldrin (2008-09-07). Against intellectual monopoly. Cambridge University Press. pp. 312. ISBN 978-0521879286. 
  27. ^ Binger, B & Hoffman, E.: Microeconomics with Calculus, 2nd ed. 406 Addison-Wesley 1998.
  28. ^ Samuelson, P. & Nordhaus, W.: Microeconomics, 17th ed. McGraw-Hill 2001
  29. ^ Samuelson, W & Marks, S: p. 376. Managerial Economics 4th ed. Wiley 2005
  30. ^ a b Samuelson, W & Marks, S: 100. Managerial Economics 4th ed. Wiley 2003
  31. ^ C-27/76 United Brands Continental BV v. Commission [1978] ECR 207
  32. ^ C-85/76 Hoffmann-La Roche & Co AG v. Commission [1979] ECR 461
  33. ^ AKZO [1991]
  34. ^ Michelin [1983]
  35. ^ BA/Virgin [2000] OJ L30/1
  36. ^ Continental Can [1973]
  37. ^ Aristotle: Politics: Book 1
  38. ^ Aristotle, Politics
  39. ^ Robin Gollan, The Coalminers of New South Wales: a history of the union, 1860-1960, Melbourne: Melbourne University Press, 1963, 45-134.
  40. ^ Ars technica The Victorian Internet
  41. ^ EU competition policy and the consumer
  42. ^ Leo Cendrowicz. "Microsoft Gets Mother Of All EU Fines". Forbes. Retrieved 2008-03-10. 
  43. ^ "EU fines Microsoft record $1.3 billion". Time Warner. Retrieved 2008-03-10. 
  44. ^ Kevin J. O'Brien,, Regulators in Europe fight for independence, International Herald Tribune, November 9, 2008, Accessed November 14, 2008.
  45. ^ Milton Friedman, Free to Choose, p. 53-54
  46. ^ In Praise of Private Infrastructure, Globe Asia, April 2008

Further reading

External links



Up to date as of January 14, 2010

From Wikiquote

A monopoly exists when a specific individual or an enterprise has sufficient control over a particular product or service to determine significantly the terms on which other individuals shall have access to it – what price is charged, in what quantity, to whom it is available, and so forth. Monopolies are thus characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods.


External links

Wikipedia has an article about:

1911 encyclopedia

Up to date as of January 14, 2010

From LoveToKnow 1911

MONOPOLY (Gr. pov07-wXia or yovoireeXcov, exclusive sale, from yOvos, alone, and 7rwXE7:v, to sell), a term which, though used generally in the sense of exclusive possession, is more accurately applied only to grants from the Crown or from parliament, the private act of an individual whereby he obtains control over the supply of any particular article, being properly defined as "engrossing." It was from the practice of the sovereign granting to a favourite, or as a reward for good service, a monopoly in the sale or manufacture of some particular class of goods that the system of protecting inventions arose, and this fact lends additional interest to the history of monopolies (see Patents). When the practice of making such grants first arose it does not appear easy to say. Sir Edward Coke laid it down that by the ancient common law the king could grant to an inventor, or to the importer of an invention from abroad, a temporary monopoly in his invention, but that grants in restraint of trade were illegal. Such, too, was the law laid down in the first recorded case, Darcy v. Allen (the case of monopolies, 1602), and this decision was never overruled, though the law was frequently evaded. The patent rolls of the Plantagenets show few instances of grants of monopolies (the earliest known is temp. Edw. III.), and we come down to the reign of Henry VIII. before we find much evidence of this exercise of the prerogative in the case of either new inventions or known articles of trade. Elizabeth, as is well known, granted patents of monopoly so freely that the practice became a grave abuse, and on several occasions gave rise to serious complaints in the House of Commons. Lists prepared at the time show that many of the commonest necessaries of life were the subjects of monopolies, by which their price was grievously enhanced. That the queen did not assume the right of making these grants entirely at her pleasure is shown, not only by her own statements in answer to addresses from the house, but by the fact that the preambles to the instruments conveying the grants always set forth some public benefit to be derived from their action. Thus a grant of a monopoly to sell playing-cards is made, because "divers subjects of able bodies, which might go to plough, did employ themselves in the art of making of cards"; and one for the sale of starch is justified on the ground that it would prevent wheat being wasted for the purpose. Accounts of the angry debates in 1565 and 1601 are given in Hume and elsewhere. The former debate produced a promise from the queen that she would be careful in exercising her privileges; the latter a proclamation which, received with great joy by the house, really had but little effect in stopping the abuses complained of.

In the first parliament of James I. a "committee of grievances" was appointed, of which Sir Edward Coke was chairman. Numerous monopoly patents were brought up before them, and were cancelled. Many more, however, were granted by the king, and there grew up a race of "purveyors," who made use of the privileges granted them under the great seal for various purposes of extortion. One of the most notorious of these was Sir Giles Mompesson, who fled the country to avoid trial in 1621. After the introduction of several bills, and several attempts by James to compromise the matter by orders in council and promises, the Statute of Monopolies was passed in 1623. This made all monopolies illegal, except such as might be granted by parliament or were in respect of new manufactures or inventions. Upon this excepting clause is built up the entire English system of letters patent for inventions. The act was strictly enforced, and by its aid the evil system of monopolies was eventually abolished. Parliament has, of course, never exercised its power of granting to any individual exclusive privileges of dealing in any articles of trade, such as the privileges of the Elizabethan monopolists; but the licences required to be taken out by dealers in wine, spirits, tobacco, &c., are lineal descendants of the old monopoly grants, while the quasi-monopolies enjoyed by railways, canals, gas and water companies, &c., under acts of parliament, are also representative of the ancient practice.

See W. H. Price, The English Patents of Monopoly (1906).

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Up to date as of January 15, 2010

Definition from Wiktionary, a free dictionary

See also monopoly



Proper noun


  1. A board game in which players use play money to buy and trade properties, with the objective of forcing opponents into bankruptcy.

Usage notes

This term may have trademark status.


External links


Up to date as of January 23, 2010

From Wikibooks, the open-content textbooks collection


Monopoly is a family board game played in the United States since the early 20th century, and distributed by Parker Brothers today. This book details some rules for monopoly.

This is a collaborative book to which anyone can contribute. Please see the project page for details of current taks.


Throughout this guide the American (Atlantic City) and UK (London) property name versions will be referred to, in that order (i.e. "Boardwalk/Mayfair"), and no others. This is because they are the most common versions, Atlantic City being the original edition and London being the default Commonwealth edition (now usually replaced by national capital editions). If you have a foreign set and don't know what property is being referred to, consult Localized versions of the Monopoly game.


Up to date as of February 01, 2010

From Wikia Gaming, your source for walkthroughs, games, guides, and more!

PSX Monopoly

Monopoly is the name of a popular board game by Parker Brothers, who was later bought out by Hasbro. It is the #1 board game in the world. The object of the game is to purchase as much property on the board as possible until the other players have gone bankrupt. This is accomplished through dice rolling, piece moving, and card drawing.



The original game was invented in 1904 by Lizzie Maggie, under the title, "The Landlord's Game". It was intended to easily convey the criticism of the land owning elite. Eventually, the game became popular through word of mouth, and Charles Darrow created his own, more developed version called Monopoly. He also bought the rights to The Landlord's Game, and brought it to Parker Brothers.

How to Play

Players are distributed a set amount of money. They pick a board piece to represent themselves, from a shoe to a thimble, and roll a 6-sided dice to determine how many spaces they move (Starting from the "Go" space). If they land on property that has not been bought, they may choose to buy it themselves. If they land on property that has been bought, they must pay a rental fee (which depends on the space) to the owner. There are other spaces, such as the "Chance" spaces, which makes a player draw a Chance card.

Whatever the card says, the player must comply with. The player could gain money, lost money, or be locked in the "Jail" space for a limited number of turns. When a player makes one whole lap around the board, by passing the "Go" space, they receive a $200 bonus.


Being the most popular board game of all time, Hasbro has taken many opportunities to create licensed tie-ins that play exactly like Monopoly, but with different pieces, names, boards and spaces.

Licensed Versions

Video Game Versions

There have video game ports/versions of the board game on the following platforms:

External Links

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Simple English

This article is about the monopolies in economics. For the Parker Brothers board game see Monopoly (game).

In economics, a monopoly (from the Greek monos, one + polein, to sell) is when a product or service can only be bought from one supplier. In many places, utilities such as telephone service or cable television are monopolies. The market is owned/dominated mainly by one company.

Many countries, including the United States, have laws to stop companies from having a monopoly.

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