Like post offices in many countries, the U.S. Postal Service has a legal monopoly on delivering letters that are not delivered overnight. [ref. needed] A legal monopoly occurs when a government decides that it is in the best interest of citizens to allow a single company to be the exclusive provider of a service (or product). Let`s say you and your family decide to move to a new city. After finding your dream home, you are busy contacting all the utility companies. If you`re trying to find a local phone service provider, you can only find a company that offers this type of service. You decide to ask some of your neighbors what their options are for phone services and discover that there is only one company in town that is available. What you have just experienced is a legal monopoly.
Early examples of legal monopolies were the Dutch East India Company, the British East India Company and many other equivalent national trading enterprises. Exclusive commercial rights have been granted by their respective national governments. Also known as a legal monopoly, a legal monopoly is a company alone in the industry and legally protected from competition. It can be entirely managed by the state, managed independently or both, and can be established by: Now let`s review an example to help us better understand legal monopolies. Let`s say Joe owns and operates a company that makes wind turbines in a very remote area. Currently, we need to find a company in this area that can provide homes and surrounding businesses with much-needed electricity. Joe`s Company is the only company that offers this type of service. There is no competition that offers a replacement for electricity.
In a legal monopoly, the government is able to regulate prices and provide generally accessible services/goods to the population, supervise the operation of businesses, and ideally move the monopoly so that it acts in the best interest of consumers. It doesn`t take long for the government to recognize the need for Joe`s service and provide support. In turn, Joe`s business is regulated by the government, especially in terms of price. In other words, Joe must follow the government`s guidelines regarding the prices it charges for the electricity produced by its turbines. Joe`s business became a legal monopoly. Historically, airlines and railways have also operated as legal monopolies for various periods. The prevailing idea behind the introduction of legal monopolies is that if there are many competitors investing in their custom delivery infrastructure, prices in a particular sector will rise to unreasonably higher levels. Thus, the meaning of “monopoly” is slightly adjusted. A company has a monopoly position in the industry if it has captured the majority of the market share and can influence the business decisions of other players in that industry.
The “monopolist” also becomes a pioneer and a leader in prices that other players follow. IRCTC is a state-owned enterprise and the only player in Indian markets operating in the industry. This makes it a monopoly because consumers have no other alternative. The company was founded in 1845. It is one of the largest railways in the world and one of the largest employers in the world. Railway networks are generally considered to be “natural monopolies”. Indeed, only one train can use the train at a time. In the mid-twentieth century, many countries created a monopoly broadcasting agency, such as the BBC, Radiodiffusion-Télévision Française or RAI. Most major countries relaxed their laws or privatized their public broadcasters by the end of the century. In theory, monopoly is a type of market structure in which a single firm operates in an industry that sells a unique product or service that cannot be easily replicated. This type of market usually has no competitors.
There may be several reasons for this. These may include technological barriers, difficulties in obtaining inputs, political and legal constraints, etc. Social media is the new market of the current century. While free services are offered to users, businesses earn on advertising revenuerevenue is the amount of money a business can earn in the normal course of business by selling its goods and services. In the case of the Confederation, this is the total amount of tax revenue, which is not filtered by any deductions.read more. With its huge market share, Facebook has almost a monopoly in this area. The company is ahead of all competitors such as Google+, Twitter, etc.