Holding a dominant position or a monopoly of a market is not illegal in itself, however certain categories of behavior can, when a business is dominant, be considered abusive and therefore incur legal sanctions. In many jurisdictions, competition laws restrict monopolies. Monopolies can be established by a government, form naturally, or form by integration. When not coerced legally to do otherwise, monopolies typically maximize their profit by producing fewer goods and selling them at higher prices than would be the case for perfect competition. Monopolies, monopsonies and oligopolies are all situations such that one or a few of the entities have market power and therefore interact with their customers (monopoly), suppliers (monopsony) and the other companies (oligopoly) in ways that leave market interactions distorted. Likewise, a monopoly should be distinguished from a cartel (a form of oligopoly), in which several providers act together to coordinate services, prices or sale of goods. Ī monopoly is distinguished from a monopsony, in which there is only one buyer of a product or service a monopoly may also have monopsony control of a sector of a market. A small business may still have the power to raise prices in a small industry (or market). Although monopolies may be big businesses, size is not a characteristic of a monopoly. In law, a monopoly is a business entity that has significant market power, that is, the power to charge high prices. In economics, a monopoly is a single seller. The verb "monopolize" refers to the process by which a company gains the ability to raise prices or exclude competitors. Monopolies are thus characterized by a lack of economic competition to produce the good or service and a lack of viable substitute goods. A monopoly (from Greek monos μόνος (alone or single) + polein πωλεῖν (to sell)) exists when a specific person or enterprise is the only supplier of a particular commodity (this contrasts with a monopsony which relates to a single entity's control of a market to purchase a good or service, and with oligopoly which consists of a few entities dominating an industry).
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