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What Is a Monopolist?

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  • Written By: Patrick Roland
  • Edited By: A. Joseph
  • Last Modified Date: 20 September 2014
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A monopolist is an individual who aims to eliminate competition for a product or service in order to attain full market control. This person uses a variety of tactics, such as buyouts, mergers and government-sponsored monopolies, to increase the strength of his business. Many countries oppose the formation of monopolies and have a variety of antitrust laws in place to combat monopolistic practices.

A monopoly is categorized as an unfair competitive advantage in a market, normally by owning a majority of the market share or a having complete dominance of outlets. The benefit for a monopolist is that his business or service has no competition and, thus, he will have security and can set his prices at any level. Historic records show that monopolies have existed for centuries.

The monopolist has many tactics at his disposal to create a monopoly and to dominate the competition in his market. A corporate buyout is one of the most common types of maneuvers, because it involves a larger company using its capital to purchase smaller companies and absorb that organization's client base. Mergers are a similar tactic that is mutually beneficial to two companies because both competing organizations join together into one group and share each other's client base, thus creating less competition. Many governments provide monopolistic options for companies as well. Government-sponsored patents and copyrights provide exclusive rights to sell a particular product for a limited time, eliminating any competition.

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One of the most famous examples of a monopolist in action was John D. Rockefeller of Standard Oil. At one time the oil giant, owned 88 percent of all oil sales in the United States. The government declared this unfair competition and created a series of antitrust laws in 1911 that effectively ended Standard Oil's control. The result broke the company into several smaller, competing companies.

This is not the only such case, and anti-monopolist laws have been created around the world. Two of the most famous include the United States' Antitrust Law and the European Community's Competition Law. Both see competition as essential to healthy growth in an open market economy. These laws, like the ones brought about in response to Standard Oil's reign, limit a company's ability to buy out competition and to unfairly set prices. Many economists are split on the fairness of these laws, some claiming that they help bolster competition and opponents saying that it is unnatural to limit monopolies because a free market should support the strongest company, not hinder it.

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Bertie68
Post 3

I like the way the government has set up patents on new medications, so that there is a limited time period that drug companies can have a monopoly on their new drugs. The drug companies spend a lot of money and time developing and testing new drugs, and they do deserve to make some money.

They do charge a lot of money for these new drugs. But regulations say that after X number of years with no competition for a particular drug, the generic drugs can now be sold and at a very competitive price.

To me, this is a very fair way to give the drug companies a way to make money, and later, a much lower price through generic drugs for those who can't pay a high drug cost forever.

BabaB
Post 2

I believe in a free market system, with competition, but any attempt to be a monopolist should be regulated by the government of any country.

If a corporation or individual tries to use money and power to gain a monopoly over certain products or services, it isn't right to make consumers pay high prices. It just isn't ethical or for the greater good of a country.

Of course, any corporation should be able to merge with or take over a smaller company, especially if they both benefit. But to go around collecting the full market share should not be allowed. Attempts to build a monopoly have happened a number of times - with phone companies, oil, computers and others. Thankfully, they have been broken up. Amen!

Oceana
Post 1

It could be said that one of my local newspapers has become a monopolist in the area. They recently bought out three smaller newspapers in the surrounding counties, so their only competition is several counties away.

I think that the smaller newspapers did benefit from the buyout, though. They had been struggling because advertising sales were down just before the merger, as well as subscription sales.

The big newspaper company offers special deals to subscribers so that they can get the smaller papers at a discount if they subscribe to the big one as well. People can also advertise in all four papers for a low rate.

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