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Thread: Is this a monopoly or something else?

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    Default Is this a monopoly or something else?

    Is a company considered a monopoly if they own businesses in more than 1 market or is there a different name for that type of business? Also, does this term change depending how big they are in one market compared to the other.

    For example: Say like a corporation owns a restaurant company, knife company, mining company, farming company, water company, electricity company, and finally a farm company.

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    Quote Originally Posted by Rad4 View Post
    Is a company considered a monopoly if they own businesses in more than 1 market or is there a different name for that type of business? Also, does this term change depending how big they are in one market compared to the other.

    For example: Say like a corporation owns a restaurant company, knife company, mining company, farming company, water company, electricity company, and finally a farm company.
    Nope, not a monopoly. Diversification. It's a monopoly when they are the ONLY company in an area and have created an environment that makes it all but impossible for competitors to enter the market or compete.

    Sometimes it's proprietary. A company can be the only one who can make certain products because of licensing or patents.

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    Thank you so much for the quick response.

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    Back in the "Old days" it was common for towns to prop up around an industry or factory, and also own all of the stores and services for the town.

    For instance when the Hoover Dam was built, Bolder City (which was on federal land and not governed by the state of NV) was the area where the workers lived. The U.S. Government owned all of the housing, stores and services that the workers used. Monopoly? Not really. It was a government project on government land. Unfair? Yeah, pretty much. And it was much worse than that.

    This was also a common practice in mining towns, and even Henry Ford owned much of the land and housing in Highland Park where the first assembly line factory was built, and the workers rented housing from Ford.

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    Quote Originally Posted by Harold Mansfield
    It's a monopoly when they are the ONLY company in an area and have created an environment that makes it all but impossible for competitors to enter the market or compete.
    Just wanted to tweak Harold's explanation slightly. The company doesn't have to be the only company in an industry to be considered a monopoly. 15-20 years ago the United States tried to break up Microsoft because Windows was a monopoly. I think it had 93-95% of the market at the time. I'm guessing other companies have been seen as a monopoly with less market share, though that is a just a guess.
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    Bell telephone is another good example. The government broke them up because they were a monopoly in every sense of the word. However, the smaller companies that they broke them up into just merged again, purchased SBC and emerging mobile companies and became AT&T. Now they do home, mobile, cable TV, and are an internet service provider. They're not a monopoly, but in some ways are worse.

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    The type of company you mentioned is called a conglomerate. There is nothing necessarily wrong or illegal about a corporation being a conglomerate... Though some may argue the ethics behind them as far as competition and fair business dealings.
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