A type of market that features one, if not all, of the traits of a monopoly such as

high price levels, supply constraints, or excessive barriers to entry. Because this
type of market would be comprised of one supplying firm, consumers would have no
choice but to purchase solely from this firm. Without proper legislation or controls,
this firm possesses the power to raise prices without adversely affecting demand
for its products/services. This type of market stands in contrast to a perfectly

competitive market. A monopolistic market favors companies to the

detriment of consumers. The market, in this case, is usually defined as a stock
market sector such as telecommunications or media firms, where this type of
market behavior is likely to be found.

There are several groups and trade organizations, such as the FCC, WTO and EU
governing council, that ensure that monopolistic markets do not form and also
create legal ramifications for companies that pursue market-cornering policies. The
Microsoft antitrust trials of the late '90s show that the markets are still fighting
against monopolistic behavior, even today.

Antitrust
The antitrust laws apply to virtually all industries and to every level of business,
including manufacturing, transportation, distribution, and marketing. They
prohibit a variety of practices that restrain trade.

Examples of illegal practices are price-fixing conspiracies, corporate mergers

likely to reduce the competitive vigor of particular markets, and predatory acts
designed to achieve or maintain monopoly power.

Microsoft, ATT, and J.D. Rockefeller Oil are companies who have been
convicted of antitrust practices.

Barriers To Entry
The existence of high start-up costs or other obstacles that prevent new
competitors from easily entering an industry or area of business. Barriers to
entry benefit existing companies already operating in an industry
because they protect an established company's revenues and profits from being
whittled away by new competitors.
 Barriers to entry can exist as a result of government intervention (industry
regulation, legislative limitations on new firms, special tax benefits to existing
firms, etc.), or they can occur naturally within the business world. Some
naturally occurring barriers to entry could be technological patents or patents on
business processes, a strong brand identity, strong customer loyalty or high
customer switching costs.

mperfect Competition
A type of market that does not operate under the rigid rules of perfect
competition. Perfect competition implies an industry or market in which no one
supplier can influence prices, barriers to entry and exit are small, all suppliers
offer the same goods, there are a large number of suppliers and buyers, and
information on pricing and process is readily available. Forms of imperfect
competition include monopoly, oligopoly, monopolistic competition,
monopsony and oligopsony.

Perfect competition is often viewed as a theoretical model, because every

industry or market operates in some form of imperfect competition. For
example, some industries rely on heavy initial capital investment, such as
industrial manufacturers and telecom providers. This makes the prospect of
having many competitors practically impossible. In the real world, markets are
evaluated by their relative closeness to perfect competition, and efforts are made
to approach it.