Causes for Monopoly

Causes for Monopoly:

1. Natural:

A monopoly might arise on account of certain natural causes. Some minerals are accessible only in certain areas. For illustration, South Africa has the monopoly of diamonds; nickel in the globe is mostly obtainable in Canada and oil in Middle East. It is natural monopoly.

2. Technical:

Monopoly power might be enjoyed due to technological reasons. A firm might have control over raw materials, scientific knowledge, special know-how, scientific secrets and formula which enable a monopolist to generate a commodity.

3. Legal:

Monopoly power is attained via patent rights, copyright and trade marks by the producers. This is termed as legal monopoly.

4. Large Amount of Capital:

The manufacture of some goods needs a big amount of capital or lumpiness of capital. All firms can’t enter the field since they can’t afford to invest such a big amount of capital. This might give mount to monopoly.

For illustration: railways, iron and steel industry, and so on.

5. State:

Government will have the solitary right of producing and selling certain goods. They are State monopolies. For illustration, we have public utilities such as electricity and railways.  Such public utilities are undertaken by the State government.

 

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