Business Oligopolies


monopoly (mənōp´əlē), market condition in which there is only one seller of a certain commodity; by virtue of the long-run control over supply, such a seller is able to exert nearly total control over prices. In a pure monopoly, the single seller will usually restrict supply to that point on the supply-demand schedule that will maximize profit. In modern times, the accelerated production and competition brought about by the Industrial Revolution led to the formation of monopoly and oligopoly. Since the notion of monopoly is antithetical to the free market ideal, it has never been popular in capitalist nations. In the United States, the most famous monopoly was John D. Rockefeller's Standard Oil Trust in the late 19th cent. Despite such legislation as the 1890 Sherman Antitrust Act (the first significant legal statute against monopoly), it was the Supreme Court that forced the break-up of Standard Oil, along with other monopolies. Since the 1960s, however, the U.S. Justice Dept. has occasionally been more active in attacking monopolies or near monopolies (such as AT&T and IBM); a major case in the 1990s involved the Microsoft Corp. (see Bill Gates).

Many governments, however, have created public-service monopolies by laws excluding competition from an industry. What resulted were generally publicly regulated private monopolies, such as some power, cable-television, and local telephone companies in the United States. Such enterprises usually exist in areas of "natural monopoly," where the conditions of the market make unified control necessary or desirable to the public interest. Some socialists have advocated the extension of the principle of public monopoly to all vital industries, such as coal and steel, that have an immediate effect on the general welfare of the economy. By the 1990s, however, many public utilities in the United States and elsewhere were deregulated, allowing for competition and lower prices (see utility, public).

Aside from utility companies, privately controlled monopolies without state support are rare. However, the concentration of supply in a few producers, known as oligopoly, is not uncommon. In the United States, for instance, several large companies have dominated the automobile and steel industries. Since the Progressive era, the U.S. government has made most forms of monopoly, and to a lesser extent oligopoly, illegal under antitrust laws. The objective of such measures is to guarantee that price will be determined by market forces rather than by arbitrary price setting among corporations. In recent years oligopolies have grown through mergers and acquisitions. The government still grants temporary monopolies in the form of patents and copyrights to encourage the arts and sciences.

See J. Robinson, The Economics of Imperfect Competition (2d ed. 1969); D. Dewey, The Antitrust Experiment in America (1990); T. Freyer, Regulating Big Business: Antitrust in Great Britain and America, 1880–1990 (1992).

The Columbia Encyclopedia, 6th ed. Copyright© 2015, The Columbia University Press.

Business Oligopolies: Selected full-text books and articles

Theory of Markets By Tun Thin Harvard University Press, 1960
Librarian’s tip: "Application of the Feedback Principle to Oligopoly Problems" begins on p. 94
Competition Policy in America, 1888-1992: History, Rhetoric, Law By Rudolph J. R. Peritz Oxford University Press, 1996
Librarian’s tip: Discussion of oligopoly begins on p. 107
The American Corporation Today By Carl Kaysen Oxford University Press, 1996
Librarian’s tip: Discussion of oligopoly begins on p. 106
Market Dominance: How Firms Gain, Hold, or Lose It and the Impact on Economic Performance By David I. Rosenbaum Praeger, 1998
Librarian’s tip: Discussion of oligopoly begins on p. 43
Theoretical Economic Systems: A Comparative Analysis By Walter S. Buckingham Jr Ronald Press Co., 1958
Librarian’s tip: "Organized Capitalism: Oligopoly Theories" begins on p. 235
Competition, Monopoly, and Differential Profit Rates: On the Relevance of the Classical and Marxian Theories of Production Prices for Modern Industrial and Corporate Pricing By Willi J. Semmler Columbia University Press, 1984
Librarian’s tip: "On Post-Marxian and Post-Keynesian Theories: The Rise of Oligopoly and Market Power" begins on p. 38
Industrializing America: Understanding Contemporary Society through Classical Sociological Analysis By Frank W. Elwell Praeger, 1999
Librarian’s tip: "The Rise and Fall of Oligopoly" begins on p. 71
The Changing Boundaries of the Firm: Explaining Evolving Inter-Firm Relations By Massimo G. Colombo Routledge, 1998
Librarian’s tip: Chap. 4 "Blurring Boundaries: New Inter-Firm Relationships and the Emergence of Networked, Knowledge-Based Oligopolies"
The Antitrust Laws of the United States of America: A Study of Competition Enforced by Law By A. D. Neale Cambridge University Press, 1966
Librarian’s tip: Includes discussion of oligopoly in multiple chapters
Looking for a topic idea? Use Questia's Topic Generator
Author Advanced search


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.