Government monopoly
Encyclopedia
In economics
, a government monopoly (or public monopoly) is a form of coercive monopoly
in which a government
agency or government corporation is the sole provider of a particular good or service and competition is prohibited by law. It is a monopoly created by the government.
It is usually distinguished from a government-granted monopoly
, where the government grants a monopoly to a private individual or company.
A government monopoly may be run by any level of government - national, regional, local; for levels below the national, it is a local monopoly. The term state monopoly usually means a government monopoly run by the national government, although it may also refer to monopolies run by regional entities called "states" (notably the U.S. states).
have historically been common, though recent decades have seen a strong privatization
trend throughout the industrialized world.
In Scandinavian countries some goods deemed harmful are distributed through a government monopoly. For example, in Finland
, Iceland
, Norway
and Sweden
, government-owned companies have monopolies for selling alcoholic beverages
. Casino
s and other institutions for gambling
might also be monopolized. In Finland, the government has also a monopoly to operate slot machines.
Governments often create or allow monopolies to exist and grant them patents. This limits entry and allow the patent-holding firm to earn a monopoly profit from an invention.
Health care systems where the government controls the industry and specifically prohibits competition, such as in Canada
, are government monopolies.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
, a government monopoly (or public monopoly) is a form of coercive monopoly
Coercive monopoly
In economics and business ethics, a coercive monopoly is a business concern that prohibits competitors from entering the field, with the natural result being that the firm is able to make pricing and production decisions independent of competitive forces...
in which a government
Government
Government refers to the legislators, administrators, and arbitrators in the administrative bureaucracy who control a state at a given time, and to the system of government by which they are organized...
agency or government corporation is the sole provider of a particular good or service and competition is prohibited by law. It is a monopoly created by the government.
It is usually distinguished from a government-granted monopoly
Government-granted monopoly
In economics, a government-granted monopoly is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of...
, where the government grants a monopoly to a private individual or company.
A government monopoly may be run by any level of government - national, regional, local; for levels below the national, it is a local monopoly. The term state monopoly usually means a government monopoly run by the national government, although it may also refer to monopolies run by regional entities called "states" (notably the U.S. states).
Examples
In many countries, the postal system is run by the government with competition forbidden by law in some or all services. Also, government monopolies on public utilities, telecommunications and railroadsRail transport
Rail transport is a means of conveyance of passengers and goods by way of wheeled vehicles running on rail tracks. In contrast to road transport, where vehicles merely run on a prepared surface, rail vehicles are also directionally guided by the tracks they run on...
have historically been common, though recent decades have seen a strong privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
trend throughout the industrialized world.
In Scandinavian countries some goods deemed harmful are distributed through a government monopoly. For example, in Finland
Finland
Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside...
, Iceland
Iceland
Iceland , described as the Republic of Iceland, is a Nordic and European island country in the North Atlantic Ocean, on the Mid-Atlantic Ridge. Iceland also refers to the main island of the country, which contains almost all the population and almost all the land area. The country has a population...
, Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
and Sweden
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
, government-owned companies have monopolies for selling alcoholic beverages
Alcohol monopoly
An alcohol monopoly is a government monopoly on manufacturing and/or retailing of some or all alcoholic beverages, such as beer, wine and spirits. It can be used as an alternative for total prohibition...
. Casino
Casino
In modern English, a casino is a facility which houses and accommodates certain types of gambling activities. Casinos are most commonly built near or combined with hotels, restaurants, retail shopping, cruise ships or other tourist attractions...
s and other institutions for gambling
Gambling
Gambling is the wagering of money or something of material value on an event with an uncertain outcome with the primary intent of winning additional money and/or material goods...
might also be monopolized. In Finland, the government has also a monopoly to operate slot machines.
Governments often create or allow monopolies to exist and grant them patents. This limits entry and allow the patent-holding firm to earn a monopoly profit from an invention.
Health care systems where the government controls the industry and specifically prohibits competition, such as in Canada
Health care in Canada
Health care in Canada is delivered through a publicly-funded health care system, which is mostly free at the point of use and has most services provided by private entities. It is guided by the provisions of the Canada Health Act. The government assures the quality of care through federal standards...
, are government monopolies.
See also
- crown corporation
- nationalizationNationalizationNationalisation, also spelled nationalization, is the process of taking an industry or assets into government ownership by a national government or state. Nationalization usually refers to private assets, but may also mean assets owned by lower levels of government, such as municipalities, being...
- Salt commissionSalt commissionThe Salt Commission was an organization in Tang China used to raise tax revenue from the state monopoly of the salt trade.-History:Following the An Lushan Rebellion revenues from the land tax began to fall. The equal-field system that sustained the land tax was undermined by the aristocracy and...
- government-granted monopolyGovernment-granted monopolyIn economics, a government-granted monopoly is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of...
- coercive monopolyCoercive monopolyIn economics and business ethics, a coercive monopoly is a business concern that prohibits competitors from entering the field, with the natural result being that the firm is able to make pricing and production decisions independent of competitive forces...
- natural monopolyNatural monopolyA monopoly describes a situation where all sales in a market are undertaken by a single firm. A natural monopoly by contrast is a condition on the cost-technology of an industry whereby it is most efficient for production to be concentrated in a single form...
- monopolyMonopolyA monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
- alcohol monopolyAlcohol monopolyAn alcohol monopoly is a government monopoly on manufacturing and/or retailing of some or all alcoholic beverages, such as beer, wine and spirits. It can be used as an alternative for total prohibition...