There are 3 types of monopolies: licensed monopolies, natural monopolies, and strategic monopolies.

1. Licensed Monopolies

Some exclusive privileges are defined by law and protected by law, patents and copyrights are licensed monopolies.

2. Natural Monopoly

If a product requires a large investment in fixed equipment, and large-scale production can lead to a significant reduction in costs, then a large manufacturer may become the sole producer in the industry. The average cost is lowest when the entire market demand is supplied by a single large manufacturer, and it is difficult for two or more manufacturers to operate profitably in that market, in which case that manufacturer forms a natural monopoly.

3, strategic monopoly

If no one other than the monopolist masters a certain production technology or know-how, the market will naturally form a technical monopoly. In the absence of both technical and legal barriers, manufacturers build barriers to establish or consolidate their monopoly position, this is a strategic monopoly.

Expanded:

Monopolies grow out of free competition in capitalism. In the stage of development of capitalism, which is basically characterized by free competition, capitalist enterprises, in order to seize more surplus value, are bound to adopt advanced production technology and scientific management methods, to carry out specialization and collaboration in production, and to increase labor productivity.

In the fierce competition, the big enterprises often rely on their economic superiority to continuously crowd out and annex small and medium-sized enterprises, so that the production of means of production, labor force and labor products are increasingly concentrated in their own hands. At the same time, the development of the capitalist credit system and joint-stock companies has broken through the limitations of individual capital and accelerated the development of capital concentration, thus also promoting the development of production concentration.

The development of the concentration of production and capital to a certain extent means that the number of enterprises is reduced, and most of the production of a sector is concentrated in the hands of a few or dozens of large enterprises, and it is easier for them to reach an agreement among themselves *** to manipulate the production and sales of the sector in the same way, thus making it possible for monopoly to be created;

Because of the existence of a small number of large enterprises, small and medium-sized enterprises are in a dominated position, and a small number of large enterprises are trying to avoid one another. The existence of a few large enterprises puts small and medium-sized enterprises in a dominant position, and in order to avoid losing out in competition and to ensure that they are profitable to each other, a few large enterprises will also seek temporary compromises and reach certain agreements, thus making the emergence of monopoly necessary.

Free competition gives rise to the concentration of production, and the concentration of production develops to a certain extent and inevitably leads to monopoly, which is the general and basic law for the development of free competition capitalism to the stage of monopoly capitalism. By the end of the 19th century and the beginning of the 20th century A.D., monopoly had become the basis of the whole economic life of capitalism.

Baidu Encyclopedia-Monopoly