Pure Monopolies Within An Industry
Alyssa Ladzinski
Doug Copeland
Economics II
3 May 2015
Pure monopoly is an economic issue that occurs when “a single firm is the sole
producer of a product for which there are no close substitutes”.1 Although an actual pure
monopoly is rare, there are many industries that are very close to being an example of
this. There are often pure or nearly pure monopolies in government-owned or
government-ran services, such as cable, electric, water companies, etc.2 Pure monopolies
come from when a single seller, the sole producer of the product, blocks the entry of any
other producers, allowing the single seller to have no competition. When there is no
competition present, the seller can then set the price and essentially have control over that
entire market.3
Barriers to entry are the factors that allow a pure monopoly to exist by not allowing
any other firms to enter the industry. This leaves the single seller with no competition
present, with the exception being an oligopoly, where several firms control the market.4
There are four main barriers to entry: economies of scale, patents and licenses, ownership
