Description 
The narrator discusses the nature of 
local, regional, national, and 
international monopolies. In particular, 
the narrator emphasizes that monopolies 
are defined by their markets and all 
monopolies depend on barriers to 
entry. 
 

Audio Transcript 

Narrator: A monopoly is defined as a market in which there is one and only one firm supplying a good or service. Marge has a local monopoly. She owns the only restaurant in Pleasantville that sells ostrich burgers. 

Narrator: Another example of a local monopoly  is a small town gas station.  Other types of monopolies are defined by their markets. 

Narrator: There are regional monopolies, like electric power companies. In most markets, consumers cannot choose their power company; they must buy electricity from one source. 

Narrator: There are national monopolies, like Polaroid, which has a monopoly on the production of instant photographic film. 

Narrator: And there are international monopolies, like DeBeers, which controls virtually all of the world’s diamond market. 

Narrator: How does a firm become a monopoly? There are a number of ways, but all depend on barriers to entry, which are impediments that prevent firms from entering an industry. 

Narrator: Ostrich Burger is a monopoly because Pleasantville is not big enough to support two Ostrich Burger restaurants; the size of the market is a barrier to entry. 

Narrator: The power company has a government-granted monopoly that prevents other companies from entering the market. Local and state governments grant licenses to power producers and give them monopolies. However, these governments also regulate these companies. In this case, the law is a barrier to entry. 

Narrator: Polaroid’s monopoly derives from the fact that they hold a patent granted by the federal government on the instant-film process.  Both the power company and Polaroid are legal monopolies. 

Narrator: The DeBeers diamond monopoly is quite different. There are no legal barriers preventing anyone from going into the diamond production business. 

Narrator: But DeBeers owns or controls almost all of the known diamond mines in the world, which gives them monopoly power over their production. The nature of limited resources is a barrier to entry. 

Narrator: In the United States, monopolies at the national level are quite rare. In most industries, monopolies are illegal, and the government is active in  breaking up monopolies or preventing their formation--as in the case of AT&T, which used to have a monopoly on long-distance service in the United States. Now AT&T has numerous competitors, such as MCI and Sprint. 

Narrator: Whether local, regional, national, or international, all monopolies depend on barriers to entry. 

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