Monopolistic Market

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DEFINITION of 'Monopolistic Market'

A type of market that features one, if not all, of the traits of a monopoly such as high price levels, supply constraints, or excessive barriers to entry. Because this type of market would be comprised of one supplying firm, consumers would have no choice but to purchase solely from this firm. Without proper legislation or controls, this firm possesses the power to raise prices without adversely affecting demand for its products/services. This type of market stands in contrast to a perfectly competitive market.

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BREAKING DOWN 'Monopolistic Market'

A monopolistic market favors companies to the detriment of consumers. The market, in this case, is usually defined as a stock market sector such as telecommunications or media firms, where this type of market behavior is likely to be found.

There are several groups and trade organizations, such as the FCC, WTO and EU governing council, that ensure that monopolistic markets do not form and also create legal ramifications for companies that pursue market-cornering policies. The Microsoft antitrust trials of the late '90s show that the markets are still fighting against monopolistic behavior, even today.

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RELATED FAQS
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    A monopolistic market and a perfectly competitive market are two market structures that have several key distinctions, such ... Read Full Answer >>
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