monopolists

Monopolists are firms that hold a monopoly in a market, meaning they are the sole or dominant supplier of a good or service and can set price with limited competitive pressure. They differ from firms in more competitive markets where many sellers exist.

Monopoly power arises from barriers to entry: legal protections such as patents and licenses, control of essential inputs, economies of scale that favor a single producer (natural monopoly), network effects that increase value with more users, or government franchises. Mergers and acquisitions can also concentrate market power.

A monopolist faces a downward-sloping demand curve and chooses price and output to maximize profit. They may engage in price discrimination, charging different prices to different buyers or quantities, and may invest in branding or product differentiation to sustain demand.

The welfare impact of monopoly is debated. Monopolies can reduce consumer surplus and total welfare, creating deadweight loss, though some argue they can fund investments that benefit society. Regulators address concerns through antitrust enforcement, price regulation in natural monopolies, or public ownership, aiming to preserve competition or limit abuse of power.

Notable historical cases include the break-up of Standard Oil in 1911 and the long-running regulation of telecommunications firms; contemporary concerns often focus on digital platforms with market-dominant positions. Distinctions are made between natural monopolies and other forms of market power.

Measuring monopoly power involves concentration metrics such as the Herfindahl–Hirschman index or price-cost margins, but definitions and implications vary and power often lies on a spectrum.