Economics

A  HYPERLINK httpwww.investopedia.comtermsmmonopoly.asp monopoly is a firm or an organization that is the only producerseller for a product. In other words, the single businessis the industry. There are a number of factors that make the formation of monopolies favorable, and among them are certain economic and technological conditions as well.

Technological conditions that are favorable to the formation of monopolies are many. A monopoly may be better able to acquire, integrate and use the best possible technology in producing its goods while entrants do not have the size or fiscal muscle to use the best available technology. Also, if technological development caters primarily to large scale productions in which case only well established monopolies can use them and make their production further more efficient. There is also a view that monopolies sometimes dont find technological development favorable and even tend to discourage it as it may lead to ease of entry for potential competitors.

As far as economic conditions are concerned, monopoly thrives best under those circumstance when investments are low, hence lesser chances of potential new entrants causing competition. Also, economies with relatively lesser regulations are considered better breeding ground for monopolies as there are no restrictions that would stop them from being created.