Government monopoly

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In economics, a government monopoly (or public monopoly) is a form of coercive monopoly in which a government agency or government corporation is the sole provider of a particular good or service and competition is prohibited by law. It is a monopoly created by the government. [1] It is usually distinguished from a government-granted monopoly, where the government grants a monopoly to a private individual or company.

A government monopoly may be run by any level of government - national, regional, local; for levels below the national, it is a local monopoly. The term state monopoly usually means a government monopoly run by the national government, although it may also refer to monopolies run by regional entities called "states" (notably the U.S. states).

Examples[edit]

The most prominent example of a state monopoly is law and the legitimate use of physical force.[2] In many countries, the postal system is run by the government with competition forbidden by law in some or all services. Also, government monopolies on public utilities, telecommunications and railroads have historically been common, though recent decades have seen a strong privatization trend throughout the industrialized world.

In Scandinavian countries some goods deemed harmful are distributed through a government monopoly. For example, in Finland, Iceland, Norway and Sweden, government-owned companies have monopolies for selling alcoholic beverages. Casinos and other institutions for gambling might also be monopolized. In Finland, the government has also a monopoly to operate slot machines.

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.[3]

See also[edit]

References[edit]

  1. ^ Sullivan, arthur; Steven M. Sheffrin (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 159. ISBN 0-13-063085-3. 
  2. ^ K. Grechenig, M. Kolmar, The State's Enforcement Monopoly and the Private Protection of Property, Journal of Institutional and Theoretical Economics (JITE) 2014, vol. 170 (1), 5-23.
  3. ^ Gratzer, David (Summer 2007). "The Ugly Truth About Canadian Health Care". City Journal (Manhattan Institute). Retrieved 29 December 2008.