Like post offices in many countries, the U.S. Postal Service has a legal monopoly on delivering letters that are not delivered overnight. [ref. needed] A patent, copyright or trademark gives the inventor the right to make his product on his own, rewarding inventions and limiting competition for years. In other words, the inventor is granted exclusion rights and excludes third parties from the manufacture, use, sale, etc. of inventions protected by patent. It is also known as monopoly law and a method of incentivizing innovation. In the United States, it is issued by the United States Patent and Trademark Office (USPTO), which allows a company to manufacture a product that does not compete against it. A legal monopoly is materially different from a “de facto” monopoly, which refers to a monopoly that is not created by a government entity.
The prevailing idea behind the introduction of legal monopolies is that if too many competitors invest in their own supply infrastructure, prices in a particular industry would reach unreasonably high levels. Although this idea is justified, it does not last indefinitely, because in most cases capitalism ends up triumphing over legal monopolies. As technologies advance and economies evolve, the rules of the game tend to stabilize on their own. This reduces costs and reduces barriers to entry. In other words, competition ultimately benefits consumers, more than legal monopolies. A legal monopoly is initially imposed because it is perceived as the best option for a government and its citizens. For example, AT&T operated as a legal monopoly in the United States until 1982 because it was considered essential to have a cheap, reliable service that was readily available to all. Railways and airlines have also operated as legal monopolies at different times in history. The National Recovery Act to promote and enforce producer cartels was defeated in Schechter Poultry Corp.
v. the United States. As mentioned above, AT&T is the best example of a legal monopoly. It was in force until 1982. The inventor of the company founded and founded the company in 1907. Since the company`s service was used by all citizens of the United States, many believed that the government would step in and take control of AT&T to prevent the company from gaining too much power. In 1913, the Department of Justice reached an agreement with AT&T and the company was allowed to operate as a monopoly for the next 7 decades. In 1970, the Federal Communications Commission authorized limited competition. Some distance selling companies filed antitrust lawsuits against AT&T in 1974.
This forced AT&T to divest its operating companies through a settlement in 1982. For this reason, the government saw no need for AT&T to maintain its monopoly status, and the monopoly ended in 1982. A legal monopoly refers to a business that operates as a monopoly under a government mandate and is legally protected from competitors. A legal monopoly is also known as a legal monopoly. They can be independent and regulated by the government or operated and regulated by the government. Legal monopolies can be established in the following ways: A legal monopoly occurs when the government orders a company to become the sole seller in a particular industry. Thus, government regulation makes the company a monopoly, and the company obtains legal protection against competition. Arthur started making the vaccine. The company does not compete in this particular vaccine market because the government has given it the exclusive right to manufacture and sell the vaccine. The agency prohibits other companies in the market from producing the specific vaccine, and so Arthur`s company has a legal monopoly in this specific vaccine segment. There are many large companies in the world today. Many of these companies promise to offer superior products to their competitors.
While these companies may feel very powerful as a leading manufacturer in their industry, they don`t have the components of a monopoly. Firms that offer goods or services that have no substitution, are the sole supplier and have no barriers to competition form a monopoly. When the government supports these monopolies in exchange for regulation, especially pricing, they become a legal monopoly. A legal monopoly is able to remedy some of the disadvantages described above. Legal monopolies arise when a government believes that allowing a single company as the sole provider of services (or products) would be in the best interest of citizens. In many cities, bus transportation has a legal monopoly, however, some municipal governments have legalized bus competition due to pressure from consumers who want lower prices and contractors who want to offer them. The Dutch East India Company, the British East India Company and similar national trading companies have been granted exclusive trading rights by their respective national governments. Private independent traders operating outside the jurisdiction of these two companies were prosecuted. Therefore, these companies fought wars in the 17th century to define and defend their monopoly territories. The postal service is one of the most common legal monopolies in the United States and Europe. As a legal monopoly, the United States Postal Service (USPS) maintains low costs and high-quality services in America. UPSC delivers to more than 100 million delivery locations in the United States, six days a week.
Early 19th Century Gibbons v. The Ogden case weakened New York`s steamship monopoly and created an exception for interstate trade. However, subsequent cases of the slaughterhouse concluded that a local law creating a legal monopoly did not violate the rights of other traders in the United States. Right now, you may be wondering what exactly a legal monopoly is. Well, it is first important to explain the general term monopoly. A monopoly is a company that offers a good or service that has no narrow substitute. It exists when there is only one supplier and there is a barrier that prevents new companies from entering the market and creating competition. One of the critical issues with legal monopolies is that once a company receives a mandate or license to operate in a particular market or industry, it eliminates consumer choice and alternatives. At the same time, it can reduce the willingness of companies with legal monopolies to innovate and offer better products and services to consumers. In addition, it can also exacerbate gender inequality.
As technology improves, new products can be created. These new products can therefore create a substitute for the goods produced by the monopolies. This can jeopardize a monopoly. Some examples of this can be found in the parcel delivery industry. The postal service was the main means of parcel delivery. However, with the emergence of other carriers such as UPS and FedEx, the postal monopoly has been weakened. In 1913, the Department of Justice entered into an agreement with AT&T, and the company was allowed to operate as a monopoly for the next seven decades. The reasoning was that the government believed it was important to have reliable telephone services available nationally.
Let`s look at some of the examples of legal monopolies: In the 1970s, the Federal Communications Commission allowed limited competition in long distance services. In 1974, MCI and other long distance service providers filed an antitrust lawsuit against AT&T. In 1982, all parties reached a settlement requiring AT&T to divest its operating companies. With this, the government deemed it unnecessary for AT&T to maintain its monopoly status, and the monopoly AT&T held for seven decades ended in 1982. A legal monopoly is imposed when it is beneficial to both citizens and the government. For example, in the United States, AT&T operated as a legal monopoly until 1982 because it was very cheap and had a reliable service that was easily accessible to all. Real routes and airlines have also acted as legal monopolies at different times in history. The idea behind the implementation of legal monopolies is that if too many competitors invest in their own supply infrastructure, prices at all levels would rise to very high levels. As technology advances and the economy evolves, the playing field balances themselves.
In other words, competition ultimately benefits consumers, more than legal monopolies. Let`s say you and your family decide to move to a new city. After finding your dream home, you are busy contacting all the utility companies. If you`re trying to find a local phone service provider, you can only find a company that offers this type of service. You decide to ask some of your neighbors what their options are for phone services and discover that there is only one company in town that is available. What you have just experienced is a legal monopoly. A legal monopoly, also known as a legal monopoly, is a business protected by law against competitors. In other words, a legal monopoly is an enterprise that has been mandated by the government to act as a monopoly. These sample phrases are automatically selected from various online information sources to reflect the current use of the word “monopoly”. The views expressed in the examples do not represent the views of Merriam-Webster or its editors. Send us your feedback.
Now that we know what a legal monopoly is, let`s look at some examples to explain this concept. As we have already mentioned, the United States.