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In economics, a government-granted monopoly (also called a "de jure monopoly" or "regulated monopoly") is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of government enforcement.
One of the government's few anti-monopoly victories was United States v. AT&T, which led to the breakup of Bell Telephone and its monopoly on U.S. telephone service in 1982. [31] The general "trimming back" of antitrust law in the face of economic analysis also resulted in more permissive standards for mergers. [31]
It is also known as antitrust law (or just antitrust [4]), anti-monopoly law, [1] and trade practices law; the act of pushing for antitrust measures or attacking monopolistic companies (known as trusts) is commonly known as trust busting. [5] The history of competition law reaches back to the Roman Empire.
As is too often the case, it seems like the only monopolies that earn government approval are the ones it helps create. The post With U.S. Steel Decision, Biden Turned His Back on Opposing ...
Anti-competitive behavior is used by business and governments to lessen competition within the markets so that monopolies and dominant firms can generate supernormal profit margins and deter competitors from the market. Therefore, it is heavily regulated and punishable by law in cases where it substantially affects the market.
In-depth analysis of the market and industry is needed for a court to judge whether the market is monopolized. If a company acquires its monopoly by using business acumen, innovation and superior products, it is regarded to be legal; if a firm achieves monopoly through predatory or exclusionary acts, then it leads to anti-trust concern.
Rate-of-return regulation (also cost-based regulation) is a system for setting the prices charged by government-regulated monopolies, such as public utilities.It attempts to set prices at efficient (non-monopolistic, competitive) levels [1] equal to the efficient costs of production, plus a government-permitted rate of return on capital.
Governments often restrict monopolies through high taxes or anti-monopoly laws as high profits obtained by monopolies may harm the interests of consumers. However, restricting the profits of monopolists may also harm the interests of consumers, because companies may create unsatisfied products that are not available in new markets.