Examples of Government-granted monopoly in the following topics:
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- There are two types of government-initiated monopoly: a government monopoly and a government-granted monopoly.
- There are instances in which the government initiates monopolies, creating a government-granted monopoly or a government monopoly.
- Government-granted monopolies often closely resemble government monopolies in many respects, but the two are distinguished by the decision-making structure of the monopolist.
- Intellectual property rights such as copyright and patents are government-granted monopolies.
- Additionally, the Dutch East India Company provides a historical example of a government-granted monopoly.
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- The government creates legal barriers through patents, copyrights, and granting exclusive rights to companies.
- In some cases, the government will grant a person or firm exclusive rights to produce a good or service, enabling them to monopolize the market for this good or service.
- It is also possible that there is a monopoly because the government has granted a single company exclusive or special rights.
- The water utility company, for example, is a monopoly in your area because it is the only organization granted the right to provide water.
- Copyright is an example of a temporary legal monopoly granted to creators of original creative works.
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- Patents are temporary monopolies granted to inventors by the government, in exchange for public disclosure of how the invention works.
- For example, NASA is a government agency that also does research.
- Such financing often takes the form of grants given to researchers in companies or organizations by the government.
- The grants are given to projects that are valuable either to the government or to society as a whole.
- Such grants can be viewed through the lens of market failure: the open market is not financing a socially or government-desirable project, so the government steps in to correct the failure.
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- Monopolies rarely occur in a pure form.
- When the term "monopoly" is used it is usually referring to a degree of monopoly or market power.
- ALCOA's monopoly began when the government gave them a patent on a low cost method of reducing bauxite to aluminum.
- In fact, the British colonies that became the United States and Canada were the result or grants from the British government.
- Hudson Bay Company and the East India Companies were firms that were granted rights to operate in specific areas.
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- Monopolies exhibit decreasing costs as output increases.
- The granting of permits or professional licenses can also favor certain firms, while setting standards that are difficult for new firms to meet.
- For example, in many countries, the postal system is run by the government with competition forbidden by law in some or all services.
- Government monopolies in public utilities, telecommunications systems, and railroads have also historically been common.
- In other instances, the government may be an invested partner in a monopoly rather than a sole owner.
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- While there is no single definition of a mixed economy, it generally involves a degree of economic freedom mixed with government regulation of markets.
- Different ways a government directly intervenes in an economy include:
- While mixed economies vary based on their degree of government intervention, some elements are consistent.
- However, the government in mixed economies generally subsidizes public goods, such as roads and libraries, and provide welfare services such as social security.
- These governments also regulate labor and protect intellectual property.
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- Monopolies on the whole are governed under antitrust laws, both on a national level in most countries and on an international level via institutions such as the World Trade Organization (WTO).
- In short, the government can provide financial support via subsidies to new entrants to ensure the competitive environment is more equitable.
- In extreme circumstances it is also a viable option for governments to break up monopolies through the legal processes.
- AT&T is a classic example of a government-backed monopoly in the middle of the 20th century, as the fixed investment of land lines for phones at that time was substantial.
- It was not practical to foster competition as a result, and the government recognized the necessity for a monopoly (until 1984, when AT&T was divested).
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- A monopoly can diminish consumer choice, reduce incentives to innovate, and control supply to enforce inequitable prices in a society.
- In order to ensure that suppliers do not take on too much power (such as the case of monopolies and oligopolies), government regulations and antitrust laws are a necessary component of the economic perspective.
- Through utilizing this control strategically, a profit-maximizing monopoly could create the following societal risks:
- As a result, a monopoly causes deadweight loss, an inefficient economic outcome.
- Outline the effect of a monopoly on producer, consumer, and total surplus
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- Public utility companies tend to be monopolies.
- Monopoly power comes from markets that have high barriers to entry.
- Monopoly and perfect competition mark the two extremes of market structures, but there are some similarities between firms in a perfectly competitive market and monopoly firms.
- For this reason, governments often seek to regulate monopolies and encourage increased competition.
- This creates a monopoly.
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- In the 1960s, government had great faith in fiscal policy -- manipulation of government revenues to influence the economy.
- Traditionally, the government has sought to prevent monopolies such as electric utilities from raising prices beyond the level that would ensure them reasonable profits.
- At the same time, technological changes spawned new competitors in some industries, such as telecommunications, that once were considered natural monopolies.
- Each level of government provides many direct services.
- The federal government provides Food Stamps to help poor families obtain food, and the federal and state governments jointly provide welfare grants to support low-income parents with children.