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Natural Monopoly

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Natural Monopoly
REPORT

ON

MONOPOLY: SOURCES AND EXAMPLES

CONTENTS

1) AREA OF STUDY

2) METHOD OF STUDY

3) MAJOR REASONS OF MONOPOLIES

4) OWNERSHIP OF KEY RESOURCE : DE BEERS EXAMPLE

5) GOVT. OWNED STRATEGIC RESOURCES: CIL EXAMPLE

6) PATENTS IN DRUG INDUSTRY

7) NATURAL MONOPOLY: INDIAN RAILWAYS EXAMPLE

8) CONCLUSION

9) REFERENCES

Area of study:
This report studies what are the various sources of monopoly and real life examples for each source. It analyses how each of these businesses grew into a monopoly and substantiates the analysis with actual facts & figures (wherever available).

Methodology of study:
The subject has been divided into sub-topics based on the source out of which the monopoly arises. The report begins with the introductory analysis of the monopoly functioning. Each source has then been studied with reference to one real life example followed by the conclusion.
What defines a Monopoly – Its Characteristics:
Profit Maximizer, Price Maker, High Barriers to Entry, Single seller, Price Discrimination:
Major sources of monopolies: 1. Ownership of strategic resources: A monopoly is likely to arise if a firm has complete control over a key input or resource used in production. Famous example is diamond trade monopoly firm De Beers. 2. Government regulations: A government-granted monopoly (also called a "de jure monopoly") is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or company to be the sole provider of a commodity. Potential competitors are excluded from the market by law, regulation, or other mechanisms of government enforcement. 3. Patents: Patents grant the inventor the exclusive right to produce a product for 20 years (new worldwide patent period established with a 1995 GATT agreement). By granting the right to

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