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What is a monopoly ?

In economics, the term “monopoly” is used when referring to instances wherein a single company is offering irreplaceable services or products. Since that particular company is the only place people could obtain the goods, the company can set their own prices, ruining market competition, which is the basis of a normal and healthy economy. When this happens, economists believe that this company is “monopolizing” a particular industry or market.

Examples of accusations of monopoly would include Microsoft as they are the only major company providing operating systems and Internet browsers for years until the open source Firefox and Linux entered the scene. Another would be the pharmaceutical company Pfizer with their then-one-of-a-kind drug “Viagra”, which had no competitors or substitutes for years. In Pfizer’s case, the company was the inventor of the drug, so the market’s demand was in the company’s favor as there were no other preexisting supplies from other companies.

A number of economists believe that the government should leave the market alone; so if monopolies occur, that is how the private market came to be and shouldn’t be touched by the government. However, other economists disagree; even if they believe that government shouldn’t interfere with the market, an anti-trust action would be necessary for special instances

Today, monopolies still occur. Samples of modern-day monopolies include DeBeers, which has power over the diamond market worldwide; the NFL controlling American football as well as MLB for American Baseball; and AT&T.

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