As we said, a monopoly can only exist if there are high barriers to entry. In addition, US Anti-trust law makes monopoly illegal in many cases. So, is this a real industrial structure?

    The answer is yes. First of all, we also noted that monopolies exist where market size is small. Many small towns have businesses that are effective monopolies. Even sizable cities have newspapers that are local monopolies. In addition, US law has no international meaning so corporations like the DeBeers corporation can have an effective monopoly on the worldwide wholesale diamond industry.

    For cost reasons, local governments usually award a franchise to single companies to supply electricity, gas, local phone service, and cable. Such licensing is a near perfect barrier to entry. So, monopoly is a very real and relatively common industrial structure, at least in comparison to Perfect Competition.

Copyright © 1995-2004, Inc. - All Rights Reserved