Building the Business
In order for a business to form a monopoly, it must first build itself up to such a degree that it can claim a large share of the market. This is incredibly difficult to do, and usually requires vast amounts of capital, hundreds of wise business decisions, several significant acquisitions and mergers and not a little luck. Once a business has found a prominent place on the market "map," so to speak, it is in a position to begin cornering that market.
Buying Up the Market
With its sizable capital, the successful business can now focus on taking over the market completely. One by one, it will buy out its competitors. As it grows, its resources become more and more vast, allowing it to blow away the competition in terms of marketing, not to mention buying power. Soon, no rivals are left to compete with the business--and the business has effectively formed a monopoly. No competition is practically possible.
Another scenario is possible, however. Instead of buying up the market, some companies in some countries begin to curry favor with the governments under which they operate, leading to government-sanctioned monopolies. Often, however, it is the government itself that takes over an entire industry, hoping to reap the benefits of its prosperity. This, too, is a monopoly--and since it is run by the government itself, it is even more impossible for competition to (legally) emerge.
- Photo Credit Photo by Konrad Mostert.
What Is a Government Monopoly?
A monopoly in general involves one business entity controlling, in practical terms, a particular market. This control could be over a resource,...
How Does a Person Become Incorporated?
Incorporating a business is the act of making a business officially registered with the state in which the business primarily operates. When...
How to Become an Auto Leasing Company
Becoming an auto leasing company is a very long process that requires applying for necessary state licenses, establishing the business and building...
How to Become a Successful Business Woman
Becoming a successful business woman can be a challenge, but if correctly approached it is an attainable goal. Read on to understand...
Oil Monopolies in the Late 1800s
After the Civil War, kerosene was becoming widely used in ovens and lamps. By the latter part of the 1800s, refining crude...
Advantages & Disadvantages of Monopolies
A monopoly creates innovation and exclusive selling opportunities, but it may lead to limited customer opportunities and high costs.
Types of Monopolies in Economics
Though you may associate monopolies with enormous, illegal entities that dominate some aspect of the economy, you likely interact with different types...