History[edit]
Under mercantilist economic systems, European governments with colonial interests often granted large and extremely lucrative monopolies to companies trading in particular regions, such as the Dutch East India Company.[2]
Today, government-granted monopolies may be found in public utility services such as public roads, mail, water supply, and electric power, as well as certain specialized and highly regulated fields such as education and gambling. In many countries, lucrative natural resources industries, especially the petroleum industry, are controlled by government-granted monopolies. Franchises granted by governments to operate public transit through public roads are another example.
Directly mandated[edit]
Governments have granted monopolies to forms of copy prevention. In the Digital Millennium Copyright Act, for example, the proprietary Macrovision copy prevention technology is required for analog video recorders.[5] Though other forms of copy prevention aren't prohibited, legally requiring Macrovision effectively grants it a monopoly and prevents other, potentially more effective copy prevention methods from being developed.
Criticism[edit]
Opponents of government-granted monopoly often point out that such a firm is able to set its pricing and production policies without fear of breeding potential competition. They argue that this causes inefficiencies in the market place, such as unnecessarily high prices to consumers for the good or service being supplied. It has been argued that government-imposed price caps might avert this problem.
Some economists, such as Lenoard Read, argue that government-granted monopolies are immoral, whereas con-coercive monopolies are not necessarily so.[14]