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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.
Sherman Act 1890 §1, covers making purchase of goods conditional on purchase of other goods, if there is sufficient market power; International Business Machines Corp. v. United States, 298 U.S. 131 (1936) requiring a leased machine to be operated only with supplies from IBM was contrary to Clayton Act §3.
Section 1 delineates and prohibits specific means of anticompetitive conduct, while Section 2 deals with end results that are anti-competitive in nature. Thus, these sections supplement each other in an effort to prevent businesses from violating the spirit of the Act, while technically remaining within the letter of the law.
Term Description Examples Autocracy: Autocracy is a system of government in which supreme power (social and political) is concentrated in the hands of one person or polity, whose decisions are subject to neither external legal restraints nor regularized mechanisms of popular control (except perhaps for the implicit threat of a coup d'état or mass insurrection).
The government may also reserve the venture for itself, thus forming a government monopoly, for example with a state-owned company. [citation needed] Monopolies may be naturally occurring due to limited competition because the industry is resource intensive and requires substantial costs to operate (e.g., certain railroad systems). [3]
Dumping, also known as predatory pricing, is a commercial strategy for which a company sells a product at an aggressively low price in a competitive market at a loss.A company with large market share and the ability to temporarily sacrifice selling a product or service at below average cost can drive competitors out of the market, [1] after which the company would be free to raise prices for a ...
Section 1 of the Sherman Act declared illegal "every contract, in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations." Section 2 prohibits monopolies, or attempts and conspiracies to monopolize. Following the enactment in 1890 US court applies these principles to ...
Governments often create or allow monopolies to exist and grant them patents. This limits entry and allow the patent-holding firm to earn a monopoly profit from an invention. Health care systems where the government controls the industry and specifically prohibits competition, such as in Canada, are government monopolies. [22]