A company or group having exclusive control over a commercial activity which creates considerable free trade market interference. Maintaining monopoly price control requires erecting, maintaining, and enforcing manipulated “barriers to entry”, so that others cannot compete fairly within the marketplace. This kind of market manipulation is an ethical issue. Monopolies may arise without the appropriate enforcement of punitive damages.
In an economy with free and fair trade, Monopolies are widely recognized to be a bad thing because they reduce the benefits of competition. Consequently there are many laws to prevent their development, known as “trust busting”. Anti-trust laws promote competition by regulating how much of an industry one company or individual can control. For example, a series of mergers may limit competition and create a monopoly for a particular type of product.
Another way monopolies develop is through vertical integration. This is cost saving strategy in which supply and customer business related to existing production are purchased for merging. Monopolies can occur within smaller local markets or scale to global proportions.
One of the advantages of a monopoly is the ability to create profit be restricting output. Microsoft and the sale of Windows to computer manafuctuers is a perfect example of such a restriction on intellectual property. A typical contract, hidden as a trade secret between such parties created an environment in which most personal computers sold booted directly into Windows. In this significant instance, monopoly status itself increases security risks, because it provides a platform to base an attack which potentially could cause mass failures of computers around the world.
The opposite of monopoly is referred to as Lassie Fairer or “hands off” economics, a popular term during the 1800s and during J.P Morgan’s reign.
Related topics
Tech Companies involved in anti-trust litigation
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