DEFINITION of 'Legal Monopoly'

A company that is operating as a monopoly under a government mandate. A legal monopoly offers a specific product or service at a regulated price and can either be independently run and government regulated, or government run and regulated.

Also known as a "statutory monopoly".

BREAKING DOWN 'Legal Monopoly'

A legal monopoly is set up in the beginning as a perceived best option for both government and its citizens. For example, AT&T operated as a legal monopoly until 1982 because it was deemed vital to have cheap and reliable service for everyone. Railroads and airlines have also been operated as legal monopolies at different periods in history. In most cases, capitalism has won out over legal monopolies as technology and the economy have become more advanced..

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