Some new drugs are produced by only one pharmaceutical firm-and no close substitutes for that drug may exist.įrom the mid-1990s until 2004, the U.S. Postal Service, your electric and garbage collection companies are a few examples. Department of Justice uses.Įven though there are very few true monopolies in existence, we do deal with some of those few every day, often without realizing it: the U.S. For example, in 2013, Microsoft’s Windows operating system ran on more than 90% of the most commonly sold personal computers. This tends to be the definition that the U.S.
While a monopoly, by definition, refers to a single firm, in practice the term is often used to describe a market in which one firm merely has a very high market share. Since a monopoly faces no significant competition, it can charge any price it wishes. In the case of monopoly, one firm supplies all of the output in a market. If perfect competition is a market where firms have no market power and they simply respond to the market price, monopoly is a market with no competition at all, and firms have complete market power.
Figure 1. Monopoly by Christopher Dombres, CC-BY.
