Kind of Monopolies

Although in a perfect market competition is unrestricted and sellers are numerous, free competition and large number of sellers are not always available in the real world. In some markets there may only be one seller or a very limited number of sellers. Such a situation is called a ‘monopoly’, and may arise from a variety of different causes. It is possible to distinguish in practice four kind on monopoly.

State planning and central control of the economy often mean that a state goverment has the monopoly of important goods and services. Some countries have state monopolies in basic commodities like steel and transport, while other countries have monopolies in such comparatively unimportant commodities as matches. Most national authorities monopolize the postal services within their borders.

A different kind of monopoly arises when a country, through geographical and geological circumstances, has control over major natural resources or important services, as for exsample with Canadian nickle and the Egyptian ownership of the Suez Canal. Such monopolies can be called natural monopolies.

They are very different from legal monopolies, where the law of a country permits certain producers, authors and inventors a full monopoly aver the sale of their own products.

These three type of monopoly are distinct from the sale trading opportunities which take place because certain companies have obtained complete control over particular commodities. This action is often called ‘concering the market’ and is illegal in many cauntries. In the USA anti-trust laws operate to restrict such activities, while in Britain the Monopolies Commission examines all special arrangement and margers which might lead to undesirable monopolies.