monopoly

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monopoly

(mənōp`əlē), market condition in which there is only one seller of a certain commodity; by virtue of the long-run control over supply, such a seller is able to exert nearly total control over prices. In a pure monopoly, the single seller will usually restrict supply to that point on the supply-demand schedule that will maximize profit. In modern times, the accelerated production and competition brought about by the Industrial Revolution led to the formation of monopoly and oligopoly. Since the notion of monopoly is antithetical to the free market ideal, it has never been popular in capitalist nations. In the United States, the most famous monopoly was John D. Rockefeller's Standard Oil Trust in the late 19th cent. Despite such legislation as the 1890 Sherman Antitrust ActSherman Antitrust Act,
1890, first measure passed by the U.S. Congress to prohibit trusts; it was named for Senator John Sherman. Prior to its enactment, various states had passed similar laws, but they were limited to intrastate businesses.
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 (the first significant legal statute against monopoly), it was the Supreme Court that forced the break-up of Standard Oil, along with other monopolies. Since the 1960s, however, the U.S. Justice Dept. has occasionally been more active in attacking monopolies or near monopolies (such as AT&T and IBM); a major case in the 1990s involved the Microsoft Corp. (see Bill GatesGates, Bill
(William Henry Gates 3d), 1955–, American business executive, b. Seattle, Wash. At the age of 19, Gates founded (1975) the Microsoft Corp., a computer software firm, with Paul Allen. They began by purchasing the rights to convert an existing software package.
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).

Many governments, however, have created public-service monopolies by laws excluding competition from an industry. What resulted were generally publicly regulated private monopolies, such as some power, cable-television, and local telephone companies in the United States. Such enterprises usually exist in areas of "natural monopoly," where the conditions of the market make unified control necessary or desirable to the public interest. Some socialists have advocated the extension of the principle of public monopoly to all vital industries, such as coal and steel, that have an immediate effect on the general welfare of the economy. By the 1990s, however, many public utilities in the United States and elsewhere were deregulated, allowing for competition and lower prices (see utility, publicutility, public,
industry required by law to render adequate service in its field at reasonable prices to all who apply for it. Public utilities frequently operate as monopolies in their market.
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).

Aside from utility companies, privately controlled monopolies without state support are rare. However, the concentration of supply in a few producers, known as oligopoly, is not uncommon. In the United States, for instance, several large companies have dominated the automobile and steel industries. Since the Progressive era, the U.S. government has made most forms of monopoly, and to a lesser extent oligopoly, illegal under antitrust laws. The objective of such measures is to guarantee that price will be determined by market forces rather than by arbitrary price setting among corporations. In recent years oligopolies have grown through mergers and acquisitions. The government still grants temporary monopolies in the form of patents and copyrights to encourage the arts and sciences.

Bibliography

See J. Robinson, The Economics of Imperfect Competition (2d ed. 1969); D. Dewey, The Antitrust Experiment in America (1990); T. Freyer, Regulating Big Business: Antitrust in Great Britain and America, 1880–1990 (1992).

monopoly

a commodity market for a particular product dominated by a single producer, who is thus able to control prices. Where a small number of producers dominate a market the term oligopoly is used. Compare PERFECT COMPETITION.

monopoly

1. exclusive control of the market supply of a product or service
2. 
a. an enterprise exercising this control
b. the product or service so controlled
3. Law the exclusive right or privilege granted to a person, company, etc., by the state to purchase, manufacture, use, or sell some commodity or to carry on trade in a specified country or area

Monopoly

™ a board game for two to six players who throw dice to advance their tokens around a board, the object being to acquire the property on which their tokens land
www.hasbro.com/monopoly
References in periodicals archive ?
The regulatory environment during the period has often been described as very liberal in that few politically erected barriers to entry were enacted and a demonopolization trend emerged.
to provide the "last mile" of delivery), then demonopolization ensures that delivery service of that material will be provided competitively, and at least cost.
Demonopolization of examination would likely increase the agency's power to achieve the fundamental goal of ensuring that the experts (whether employed publicly or privately) reviewing patent applications have good incentives as they opine on patentability.
(60.) One would have liked to say "demonopolization comes before privatization," a shrewd piece of advice, in the author's opinion.
Transformation of state-owned enterprises (SOEs) and demonopolization of state monopolies was pursued under auspices of a new Commercial Code introduced in 1991.
However, these researchers also found difficulties with increasing efficiency of privatized former state assets and demonopolization. This is because, in most transformational economies, the capital stock of the old state enterprises often turned out to be worth less than anticipated.
As Peter Berger has pointed out, "secularization brings about a demonopolization of religious traditions and thus, ipso facto, leads to a pluralistic situation." And religious pluralism creates a "market situation" in which "the religious tradition, which previously could be authoritatively imposed, now has to be marketed."(2) Christianity has no future in Latin America if it does not take seriously this aspect of the world today.
Bravely defending perhaps the last state-owned telecommunications monopoly in the Organization of Economic Cooperation and Development is in striking contrast to Klaus's emphatic rejection of the social-democratic "third way," and to the pledge he made in a 1990 interview with REASON ("No Third Way Out," June 1990) to attack the "giant, powerful state monopolies" with a "philosophy [that] can be summed up as demonopolization" (his emphasis).
For example, insofar as privatization and demonopolization are requisite conditions for market economy, they should precede price liberalization or deregulation.
Or as Yarrow (1990, in Foldvary, 1993) pointed out: `In the policy mix of privatization, demonopolization, and deregulation, the latter two should be given prority.'
However, Markey pointed out that a key federal role in the transition will be the "Demonopolization," which is implicit in deregulation, because competition relies upon it.
Policies regarding price and trade liberalization, demonopolization and deregulation, a hardening of budget constraints on SOEs, and regulatory systems that encourage external shareholder participation may be more critical for private sector development than privatization of ownership by itself.