monopoly
/ muh-NOP-uh-lee /
A monopoly is a market with exactly one seller and no close substitute — the only game in town. If you want the thing, you buy it from them or you don't have it. The classic image is the only well in a desert village, or a single railway line through a mountain pass: there is nowhere else to turn, so the seller, not the market, decides the price. The word comes from the Greek monos (single) and polein (to sell).
Because it has no rivals, a monopolist is a price maker rather than a price taker: it faces the entire downward-sloping market demand curve all by itself. That single fact changes everything. To sell more, it must lower the price — not just on the next unit but on all of them — so its incentive is to hold output back and keep the price high, picking the quantity where its marginal revenue equals its marginal cost. The result is the textbook monopoly outcome: a higher price and a smaller quantity than a competitive market would deliver, with the gap turning into extra profit for the firm and lost value for society. A monopoly survives only if something keeps competitors out — patents, control of a key resource, huge upfront costs, or law — which is why barriers to entry are the real heart of monopoly.
In practice, pure monopolies are rarer than the headlines suggest; what we usually face is strong market power short of a literal sole seller. The honest nuances matter. A monopoly is not automatically evil: a patent monopoly is the deliberate reward that funds the invention of new medicines, and a natural monopoly (one water network) can be cheaper than duplicating pipes. The worry is the abuse of the position — gouging, neglecting quality, or smothering would-be rivals — which is exactly what competition law exists to police.
For decades the De Beers company controlled most of the world's rough diamond supply, holding back stones to keep prices high — a near-monopoly that, with the slogan "A diamond is forever," also taught the world to want what it alone could sell.
A monopolist's lever is restricting supply — scarcity, sometimes manufactured, is what props the price up.
Having a monopoly is legal in most places; abusing it is not. Antitrust law usually targets specific harmful conduct (price-gouging, predatory pricing, blocking rivals), not the mere fact of being big or alone.