Why You Should Never Try To Enter A Monopolistic Market? – Answered

(b) Social Monopolies:

Considering the greater interest of the people the State deliberately creates these monopolies. Social monopolies are also known as public utility monopolies. The objectives are to prevent wastage of capital equipment and to provide certain essential commodities at a cheap rate.

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If public utilities are to be operated without loss, then they must come under the control of a single firm if two electric companies are allowed to serve the same locality, there will be unnecessary and useless duplication of electric lines in the same street.

(c) Legal Monopolies:

When the law prevents duplication of a product a legal monopoly is created. Patents for inventions and copyrights for books are the best examples of such monopolies. The State grants to the inventors the sole right to enjoy their inventions.

(d) Voluntary Monopolies:

Sometimes with a view to increase profits a few firms voluntarily combine amongst themselves. The objectives of voluntary monopolies are to increase profits by avoiding competition amongst themselves. Trusts and cartels are such examples.

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