Definition of Monopoly, Purpose and Types

Monopoly is an activity carried out to dominate the scope of business by only one business actor or certain group. Monopolistic practices in business are carried out in order to concentrate economic power resulting in unfair business competition because it harms the public interest.

Definition of Monopoly

Monopoly has the meaning as a business actor where the product or service offered is only owned by one business actor.

In Indonesia, monopoly business practices are monitored through Article 17 of Law no. 5 of 1999 regarding the prohibition of monopolistic practices and unfair competition.

The article also discusses the criteria regarding business actors who will be deemed to be carrying out a monopoly including, there is no substitution or substitute for the goods and services concerned, other business actors cannot enter into competition and business actors have more than 50% market share for one type of goods or certain services.

Purpose of the Prohibition of Business Monopoly

The prohibition of monopoly in this business aims to seek justice and efficiency through eliminating irregularities with the following considerations:

• Prevent the conquest of market share on a large scale by one or a few people.
• Prevent obstacles when new business actors try to enter market share.
• Prevent the occurrence of obstacles that result in business competitors not developing as a result of business monopoly.

Monopoly results in a product or service that is produced cannot be traded elsewhere. This is not only detrimental to other business actors, but also to the people who are affected by the business monopoly in order to meet their needs.

Monopoly Types

Monopoly in business ventures will also cause the community to have no space to be able to participate in developing business potential in the market share. Monopoly is distinguished by its types, namely:

• Monopoly by Law

Monopoly in business ventures that occur due to the enactment of laws related to privileges and legal protection for certain business actors for inventions that are considered beneficial to mankind, so that they are given exclusive rights in the form of copyright, patent, trademark and others

• Monopoly by Nature

This type of monopoly is natural, occurring because market size will become more efficient if there is only one business actor and new business actors will be more easily eliminated because the market size makes it impossible for newcomers to enter.

• Monopoly by License

Monopolies that occur due to collusion between business actors and the local government thereby disrupting the market mechanism to run efficiently. Usually this type of monopoly is carried out by assuming other business competitors are weak and relying on licenses granted by the government.

So, therefore, monopoly practices in the business world do not provide more opportunities and space for new business actors to enter market share. Monopoly also basically depends on the readiness of the government in organizing the course of business within the country. Hopefully this information can help you!