Monopoly

Monopoly is just the opposite of perfect competition. The word ‘monopoly’ is a Latin word. It is the combination of two words – ‘mono’ means single and ‘poly’ means seller. Thus monopoly means single seller. But this is not the full meaning of monopoly. Monopoly must produce a product which does not have close substitute in the market. If close substitute is available, monopoly will be a king without a crown. Again existence of a single seller presupposes absence of competition and outside firms face strong barriers to enter into the business. This type of market is generally found in public utility undertakings like water supply. Distribution of electricity and railway transport etc. for increasing efficiency and reducing costs.

Definition

Monopoly refers to a market structure where a single firm-industry is the sole producer and seller, selling a commodity which does not have close substitute in the market.