What is a monopoly?

A monopoly is characterized by a market structure where a single seller dominates the entire market for a particular good or service. This means that the monopolist has substantial control over the pricing and supply of that product, often leading to a lack of competition.

In a monopoly, the unique nature of the product or service offered by the monopolist typically means that consumers have limited choices, as there are no close substitutes available. This lack of competition can lead to higher prices and reduced output compared to more competitive market structures.

Monopolies can arise due to various factors, including high barriers to entry that prevent other competitors from entering the market, exclusive control over resources, government regulations, or significant economies of scale that make smaller competitors unviable. Hence, the defining feature of a monopoly is the presence of a single seller that holds significant market power.