The monopoly market has only one dominant seller, and that dominant seller has a substantial share

of the market. Technically, a company must have 100 percent of the market to be a monopoly, but
in practice a company with less then 100 percent of the market can be considered a monopoly; that
is, a monopoly market can consist of a single dominant firm with, say, 90 percent of the market and
dozens of other companies each with less than one percent of the market.

The key feature that determines whether a company has a monopoly is whether that one company
has such control over a product that the company largely determines who can get some of the
product and what the product will sell for.

The second way in which a monopoly differs from a perfectly competitive market is that instead of
being a market that other companies “can freely and immediately enter or leave,” the monopoly
market is one that other companies cannot enter or that it is very difficult for other companies to
enter. Other companies are blocked from entering by “barriers to entry” that keep other companies
out, such as patent or copyright laws that do not allow other companies to make the patented
product, or high entry costs that make it too costly or too risky for a new seller to try start a
business in that industry.

For example, a company might threaten to inflict substantial economic harm on any company that
tries to enter its market (for example, by flooding the market with the product so that prices fall
until it is no longer worth being in the market), or it might cultivate a reputation for being willing to
retaliate viciously against any company that enters the market.

Two contemporary examples of monopoly markets that are worldwide market for operating systems
for personal computers and the market for office suite soft-ware. The operating system market is
dominated by Microsoft’s Windows which had a total global market share of 70 percent in 2023.
Microsoft also has a monopoly in the worldwide market for integrated office suite software where
its MS Office suite commanded 90 percent of the market in 2023. While Microsoft does not hold 100
percent of either of these markets, most observers characterize its control of these markets as
monopolies.

Next is Economies of scale, which happen when a company produces so many items that it is less
expensive for it to produce each one than it would be for a smaller company. Microsoft has cheaper
costs per unit than its rivals because it produces and sells a lot more Windows and MS Office than its
rivals. These costs include marketing, research, and administrative expenses.

Next, Brand loyalty is another obstacle. To challenge Microsoft Office's 95% market dominance, a
company would need to overcome its high brand loyalty, which would need to make another
significant and dangerous investment in brand development.

Lastly,it is known as the "network effect" states that a product's value rises as more people utilise it.
Customers choose operating systems like Windows above others in the software business because
they provide a wider variety of software solutions. The fact that programmers prefer to write for
operating systems like Windows that have a larger user base is the cause of this overabundance of
software. Customers find software more appealing when it becomes more widely available as more
people switch to Windows. New operating systems, such as Unix, find it difficult to compete with
more established ones, such as Windows, because of this problem.
LOCAL OR REGIONAL MONOPOLIES

Although there are few companies that have global monopolies like Microsoft, there are numerous
companies that have local or regional monopolies, i.e., monopolies over markets that serve specific
geographical areas such as a city, a county, or a state. Examples of companies with local or regional
monopolies include public utilities, cable companies, trash collectors, road construction companies,
postal services, water supply companies, phone companies, electrical power companies, etc.

The ability of the monopoly business to fix its production at a quantity below equilibrium and at a
level of demand so high enables the company to charge prices considerably above the supply curve
and even above the equilibrium price, allowing it to harvest an excess monopoly profit. For example,
a monopoly seller may set prices higher than their equilibrium level, at $3. The monopoly firm can
guarantee that all of its products are sold and that it makes significant profits from its operations by
restricting supply to the quantities that customers would pay at the monopolist's high pricing (300
units in Figure 4). At the turn of the century, for example, the American Tobacco Company, with a
monopoly in the sale of cigarettes, was making profits equal to about 56 percent of its sales. Drug
company Burroughs Wellcome (now part of GlaxoSmithKline), for example, was pressured by angry
activists to lower its price for AZT when it was the only treatment for AIDS.