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

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.

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

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.

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.

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 '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.

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.

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 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.

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.

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.

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.

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.

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.

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.

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.

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.

Companies go public via an initial public offering (IPO) to raise large amounts of capital, helping them expand, invest in new ventures, hire more staff, or pay off debts.

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.

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.

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.

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

'Genericide:' Learn how too much brand awareness can hurt a company's trademark

When a brand becomes so popular that consumers regularly call the product by the brand name like a noun or verb, that trademark becomes generic because consumers no longer associate a specific brand with a certain product. A generic product can hurt a company's right to trademark or even cause companies to lose it. (Some users may experience a paywall.)

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.

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.

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.

A breakdown of net neutrality, including its benefits and disadvantages

The principle dictates that all internet traffic should be treated equally by internet service providers and that they cannot block, slow, or charge more fees for access to specific webpages. This would help ensure equal access to the internet and prevent larger companies from paying to prioritize access to their content, but it would require greater government intervention.

Understanding the differences between capitalism and socialism

The two economic systems are rarely found in their pure form. Capitalism emphasizes private property, capital accumulation, and limited government regulation, while socialism favors government control of production to meet the needs of everyone rather than to generate profit. Most economies are a mix of both.

Watch a breakdown of 'The Volcker Rule,' which stopped banks from being able to make trades with client money and is one of the most controversial financial regulations to date.

Stock buybacks are when a company purchases some of its own shares of stock

This reduces the number of shares on the market and, therefore, makes the remaining shares more valuable. Buybacks have received a lot of criticism in recent years for many reasons, such as how they could artificially inflate share prices.

Listen to a podcast that traces the history of DOJ antitrust enforcement

This podcast series traces how the US government's approach to regulating big business has changed over a century—from the DOJ's breakup of John D. Rockefeller's Standard Oil monopoly, through lawyer Robert Bork's influence on how courts interpret competition law, to the FTC's modern antitrust lawsuit against Amazon.

Why does the stock market matter?

Open any newspaper, turn on your local TV news station, or listen to a daily business radio segment, and you’re bound to hear about how the stock market is performing. Netflix created a 17-minute (free) explainer that dives deep into the nitty-gritty of how we got here.

What something costs is reflective of a balance in the market determined by the amount of demand relative to the supply of goods and services

Because economies are complex systems, a wide variety of issues influence this balance—including some things generally considered to be positive, like rising wages.

International organizations exploit ultimate beneficial owner policies in different countries to shield bad actors

UBO policies help determine who owns businesses by evaluating who is making the decisions, regardless of the listed owner.

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.

A 1948 Supreme Court ruling realigned the film industry

1948's landmark United States v. Paramount Pictures found that the "Big Five" studios violated antitrust laws, effectively ending the reign of the vertically integrated system and the golden age of Hollywood.

Mark Zuckerberg has nearly exclusive decision-making authority in Meta

Meta has a dual-class stock structure, meaning there are two types of stock that have different voting rights. Zuckerberg owns 90% of the company's Class B stock, which is allotted 10 votes per share, whereas Class A shareholders get one vote per share. He's also the CEO and the chairman of the board, meaning Zuckerberg has majority control over the company. (Some users may experience a paywall.)

Billionaires are racing to space to control future markets

Although different companies have described focuses ranging from luxury tourism to Martian space colonies, all are building infrastructure to capitalize on the shift away from government-only control and betting big on reusability and scale. By securing public contracts and subsidies, they aim to develop strategic partnerships toward dominance in low Earth orbit.

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.

A 'large-cap' company has a market capitalization of more than $10B

The S&P 500 is primarily composed of large-cap companies. The idea is that the index provides a big-picture view of the economy by assessing the performance of many of the largest public companies across different industries. The median market capitalization of companies listed on the S&P 500 is around $40B.

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.

Ozempic parent company Novo Nordisk operates under a 'foundation ownership model'—meaning that a foundation holds the majority of the company's voting power, while most of its equity is owned by public investors.

Trademarks are a form of consumer protection

Trademarks help brands distinguish their products from competitors, but they also give consumers clarity around the product they are buying and where it comes from. Distinguishable names help prevent consumer confusion and maintain a consumer's ability to choose their preferred product and brand.

The story of the Sackler empire behind highly addictive OxyContin

This investigative report examines how the Sackler family built its fortune through Purdue Pharma’s aggressive marketing of OxyContin, a highly addictive painkiller. Through 2017, the drug had generated more than $30B in sales for Purdue Pharma, controlled by the Sacklers.

Watch an insider break down how multilevel marketing companies operate—from recruitment to retention.

The commerce clause gives the federal government authority to regulate interstate economic activity

This short constitutional provision has allowed Congress to regulate everything from wheat production to racial segregation, greatly expanding federal power by linking national authority to interstate economic activity.

Read about why bans on short selling are a controversial policy

Generally, short selling is legal, but regulations often restrict short positions when a stock has experienced a sharp price decline (more than 10% in one day). However, negative feedback loops in times of financial crisis have given short selling a bad reputation. The government has temporarily banned short selling during previous market downturns—like The Great Recession of 2008 and the early months of the COVID-19 pandemic—but experts argue whether those bans actually improved market stability or just distorted prices.

Indicators of economic bubbles include euphoric narratives and extreme valuations.

Wealthy, 'chaebol' families rule South Korea's economy

A handful of huge family-run conglomerates, or chaebol, are the engines of South Korea’s economy, with Samsung alone representing 20% of the country’s GDP. This gives the chaebol (literally “wealth group”) outsized power, often leading to corruption, labor violations, and anticompetitive practices. One economist interviewed in this Vice documentary says the chaebol have replaced Korean democracy with corporatocracy.