Utility companies are often considered 'natural' monopolies, which occur in industries where the upfront costs of entering the market are high, making competition unrealistic.

Monopolies are considered the most extreme form of imperfect competition

True monopolistic companies face no competition, meaning there aren't any near substitutes for the goods or services the company provides. Often, no competition exists because the monopoly is either approved by the government or the barrier to entry is costly.

An overview of monopolies, when one company controls an entire market

In the business world, a monopoly exists when one company controls the entire market. Regulators take issue with monopolies because they have been found to limit consumer choices, raise prices, and hurt competition.

Read the Federal Trade Commission's legal definition of a monopoly

The Federal Trade Commission and the US Department of Justice (DOJ) Antitrust Division are the regulatory agencies responsible for overseeing antitrust laws. Before deeming any company a monopoly or acknowledging monopolistic power in a market, the FTC conducts thorough research into market competition, price, and even other competitors' business practices.

Market concentration and high markups don't always signal a monopoly

When regulators and economists evaluate whether a company constitutes an illegal monopoly, they often consider its overall market share or its relatively high price markups. This piece argues that the Olley-Pakes decomposition is a better measure, identifying whether customers within a market are switching to more productive companies.

An oligopoly is a market structure where a few large businesses dominate the entire market

When a few large companies dominate a market, changes in pricing for goods and services affect the entire market. Airlines are a common example of an oligopoly. Because the barrier to entry in the aviation industry is high, only a few airline companies offer the majority of the industry's services. While there is some competition, pricing across the board is largely intertwined and based on other companies' prices.

A 'bilateral monopoly' occurs when there's one supplier and one buyer in a market

Bilateral monopolies are often used to conceptualize labor markets in small towns. Using this concept, large employers have a monopoly over the labor market, while workers have a monopsony as the only available laborers.

Network effects are the economic term for a good or service's popularity

When goods or services become especially popular, firms that provide that good or service become dominant in the market—which can ultimately lead to a monopoly.

Modern examples of oligopolies include the airline industry

An oligopoly is a market structure dominated by a few key suppliers. In the US, as of 2021, just four airlines (Delta, United, Southwest, and American) controlled nearly two-thirds of all domestic flights, making the US airline industry one example of an oligopoly.

Explore a list of well-known monopolies

Many American monopolies popped up during the rapid industrial growth of the Gilded Age. Industries like steel, tobacco, railroads, and telecommunication have all been monopolized at some point in history.

Watch how American monopolies used vertical and horizontal integration strategies to command markets

Vertical integration occurs when a company controls the entire manufacturing or development process, whereas horizontal integration involves expanding a company's market share. Both strategies have been used by US monopolies to establish dominance in markets.

Modern antitrust law was created to combat the Standard Oil Trust

John D. Rockefeller's Standard Oil Trust enabled him to evade laws against a single corporation buying stock in another. His centralized board of directors held stock in many different oil companies under his control, allowing Rockefeller to eventually monopolize the oil refining industry. Efforts to regulate and prevent the Standard Oil Trust's monopoly became known as "antitrust" laws.

A 'monopsony' is a market with a single buyer—rather than a single supplier

A monopsony is the demand-side equivalent of a monopoly, where a single buyer commands a market. In a monopsony, the buyer has an outsized influence over the price of a product or service because they control most or all of the sales in that market.

Patents arguably grant inventors monopolies for a short period of time

As a way to reward innovation, the government grants short-term monopolies on patented products. Patents block other companies from producing or selling that product, giving inventors the rights and opportunity to establish themselves in a market before other competitors enter.

Understanding how non-profit entities manage electric grids to ensure supply-demand balance

Independent System Operators in smaller areas and Regional Transmission Organizations that operate across multiple states run wholesale electricity markets. Electricity suppliers can submit competitive bids to meet estimated demand in day-ahead markets while keeping consumer costs low. ISOs and RCOs also inform markets of deviations in these estimates so that suppliers can adjust how much power they generate, which is then bought and sold in real time.

Nvidia controls more than four-fifths of the GPU market—but isn't considered a monopoly

Semiconductor company Nvidia has a commanding market share when it comes to graphics processing units. Its competitors include Advanced Micro Devices and Intel, which together account for less than a fifth of the GPU market.

Standard Oil's predatory business practices included temporarily operating at a loss to drive competitors out of business

Rockefeller's oil monopoly had a dark side, including cutting oil prices so low that Standard Oil was sometimes temporarily operating at a loss in order to drive competitors out of business.

Robber barons, the monopolistic business people of the 19th century, explained

“Robber baron” was a term used to describe 19th-century businesspeople who engaged in monopolistic business practices and didn’t face much business regulation, resulting in significant wealth.

Learn more about the four main market structures

In modern economic theory, there are four main market structures. Under each market structure, firms (or businesses) have differing levels of competition and reach different levels of price efficiency based on the consumer's willingness to pay for a product or service.

View a map of the balancing authorities managing electric systems and costs throughout the continental US

These are made up of utilities, Power Marketing Administrations—hydropower marketers from the Department of Energy—and groups of utilities that have formed regional entities called Regional Transmission Organizations or Independent System Operators. Collectively, balancing authorities ensure supply meets demand and can direct utilities to implement rolling blackouts to prevent permanent damage to electrical equipment.

Examining the causes of power outages, from system damage to preventative measures

Stray balloons, contact with trees, malfunctioning equipment, and severe weather are among the causes of failures that can cause widespread, unplanned blackouts. Although contingency options that rely on alternative transmission pathways to deliver electricity from generators to consumers may be possible, some shutoffs, brownouts—available power is reduced—and cycles of repeated outages may be intentionally implemented to protect public safety.

Legendary venture capitalist Peter Thiel once wrote that 'competition is for losers'

With Peter Thiel's "Monopoly Theory," the Founders Fund partner argued that investing in companies that create new categories, rather than those that compete with other businesses in existing ones, is a best practice in venture capital.

Read about the history of the Sherman Antitrust Act, the first law to ban monopolistic behavior

In its later years, Standard Oil formed a business trust that reflected the company's exponential growth. Politicians wanted to prevent such trusts and used the Sherman Antitrust Act to force Standard Oil to break up.

In 2020, the US DOJ sued Google for unlawful monopolization of the search engine market

The US Department of Justice and numerous states accused Google of making exclusionary agreements with Android phone manufacturers to make its search engine the default on those devices, preventing competitors from gaining market share.

A centrally planned economy is one where the government—not markets—sets production

This Investopedia article explains how command economies work, which countries have used them, and why even market-based nations like the US sometimes adopt tools such as rationing or price controls during wartime or national emergencies.

Private equity firms can be 'powerful partners' or 'formidable competitors'

Under the best circumstances, PE firms can increase a company's value using strategies that might not be suitable for public companies facing pressure for immediate shareholder returns. But PE firms are often portrayed negatively due to the aggressive strategies they sometimes use to cut inefficiencies. As PE has grown, many firms have changed their strategies, shifting away from aggressive scaling to more integrated acquisitions.

The history of the North American power grid, which is composed of five major grids

Thomas Edison's Pearl Street Station was the first US commercial power plant, burning coal to power lamps for some Manhattan residents. Over time, local power plants would be bought out by larger ones, forming interconnected systems spanning multiple states. Today, the Eastern Interconnection and Western Interconnection are the largest of these systems.

Standard Oil used vertical integration to create an empire

“Vertical integration” is a modern business phrase that refers to a company taking on multiple stages of production—but John D. Rockefeller pioneered it with his Standard Oil company, employing its own plumbers and handling its own oil transportation.

Private companies are often harder to value than public companies

That's partly because there isn't readily available stock information, and financial accounting is kept behind closed doors. Typically, determining the value of a private company involves, among other things, closely comparing the private company with its competitors.

Nuclear power supplies almost half of US carbon-free energy

As of 2023, nearly 20% of US electricity comes from nuclear power, but most reactors were built from 1971 to 1990. Expansion slowed due to safety concerns, high costs, and competition from natural gas.

Multilevel marketing companies are direct sales companies with a pyramid-shaped hierarchy resulting from recruitment, but they aren't legally considered pyramid schemes because revenue is driven by product sales rather than recruitment fees.

Monopoly was based on the satirical Landlord's Game, which criticized the abilities Monopoly rewarded.

Discover why Texas runs its own electric grid, separate from the other US interconnections

In 1935, electrical utilities in the Lone Star State opted to rely on the state's own fossil fuel reserves to power an independent electric grid. While this prevented the federal oversight required for the Eastern and Western Interconnections that span multiple states, it also meant Texas's grid was unable to draw sufficient backup power during the winter 2021 power grid failure.

Establishing the wind power grid required incentives, reliability, and affordability

Although wind was harnessed to generate electricity for individual buildings in the late 1800s, high costs, mechanical issues with turbines, and better fossil-fuel alternatives delayed wind power's widespread growth. After the oil crises of the 1970s, governments sought alternative energy sources and, in the decades that followed, provided tax credits to expand the wind power market.

Learn how critical services, infrastructure, and people would be impacted by a US-scale blackout—a nationwide, long-term failure of the electric grid.

A look at how power is restored after an outage on the electric grid

From minor system failures to more widespread blackouts, crews begin by assessing damage done to infrastructure, such as transmission towers and distribution power lines. Prioritizing essential services, such as hospitals, crews then begin restoration, starting with any damage found closest to the power generation and working down the distribution system to customers.

Oil and natural gas from fracking is considered unconventional

This method forcibly extracts fossil fuels from tightly packed rocks, where they form from organic matter that has undergone extreme heat and pressure. Conventional drilling, on the other hand, waits for the oil and gas to escape from shale and accumulate in more porous and permeable rocks, such as limestone.

Policymakers make complex trade-offs when considering tariffs—while they can generate government revenue and encourage the consumption of locally produced goods, they can also lead to higher consumer prices and may negatively impact economic growth.

In 1936, the federal government passed the Robinson-Patman Act, an antitrust law initially aimed at breaking up the power of the grocery store chain A&P.

Why decarbonizing the entire electric grid is impossible with its current infrastructure

Fossil fuel plants can be built anywhere and have thus typically been built near highly populated areas, such as coastal cities, where electricity demand is high. However, certain renewable resources operate most efficiently in specific regions, such as wind turbines in the Midwest, and therefore require substantial transmission infrastructure to be constructed to transport the generated electricity.

A 'unicorn' is a private company with a $1B-plus valuation

Just like a horse with a spiraling horn on its head, private companies with a more than $1B valuation are rare creatures. But unlike the mythical creature, this type of “unicorn” is occasionally spotted in the wild. Unicorn companies include SpaceX, OpenAI, Skims, and more.

In 2018, the Supreme Court sided with American Express in a case that significantly changed antitrust regulation.

The US Department of Justice sued Visa, Mastercard, and American Express in 2010 over alleged anticompetitive contracts with merchants. While Visa and Mastercard settled out of court, American Express went to trial and had its case taken all the way up to the Supreme Court—which ruled that both sides of a transaction business must be analyzed to determine a monopoly.

The engineering underlying the electric grid and why it needs to be modernized

The system includes generators for producing electricity and millions of miles of transmission and distribution lines to transport the energy. The substantial increase in the number of electronic devices and electrical demand since the construction of much of the grid in the mid-1900s has strained infrastructure, requiring continuous upgrades and massive investments in new construction.

All clean energy technologies rely heavily on critical minerals

Although many of these minerals have been used for decades, such as copper in electrical wiring, the accelerating demand for them has strained existing extraction and processing systems. Supply chain disruptions for these materials may delay and increase the cost of transitioning to solar, wind, hydroelectric, and geothermal power.

The firms running America's voting systems

Three companies make up over 90% of the US market share around voting systems, and like any company, they're priorities aren't always aligned with the public's. Dive into the industry of voting machines in this investigation piece from the Guardian.

Jevon's paradox is an economic principle arguing that as technological progress makes using resources, like coal or water, more efficient, the consumption of that resource will paradoxically increase.

Like nuclear power, US geothermal power plant construction stalled for decades

Development and investment into geothermal energy took off in the 1960s. However, by the 1980s, companies repeatedly failed to find reservoirs of hot water when exploring new locations, and investors lost interest in the expensive drilling required. By the 2020s, technological advancements had finally helped mitigate exploration risk and expand viable drilling locations.

Data center companies are worsening housing undersupply in some regional markets.

Dual-class stock structures separate equity and decision-making authority

In the past few decades, dual-class stock structures have become an increasingly popular way for companies to raise capital in public markets without allocating traditional shareholder voting rights. Meta, Estée Lauder, and The New York Times are companies that are famously dual-class.

Tech giants like SpaceX and Meta are increasingly behaving like sovereign powers

Companies now make unilateral decisions once reserved for nation-states, such as controlling satellite internet access in active war zones and influencing global information flows. Lawmakers and the international order are struggling to keep up with technological developments, let alone regulate them.

Understanding why the US can't use its own crude oil and depends on global markets

Before advancements in fracking technology made lighter shale oil readily available, US refineries had been built and optimized for decades to process heavier oil from other countries with high profitability. Despite being able to refine lighter oil, US oil companies can operate with better margins by exporting it to other nations whose refineries are optimized for it and importing heavier oil, for which the US has the infrastructure.