Monopoly and monopolised markets

Markets are divided into four types by the degree of competition. In a pure competition market very many sellers sell the same good, entry is easy and prices are free; a farmers’ market is close to it. In monopolistic competition there are many sellers, but their goods are similar rather than identical, so each has a little influence on the price: cafes, clothes shops. In an oligopoly a few large companies hold the market and new ones find it hard to enter. In a pure monopoly one seller sells the good and the buyer cannot choose. A monopolist may raise the price and not hurry to improve quality, which harms buyers and the economy. In some branches (power grids, water pipes) building several pipelines or networks would be a waste, so a single system is more efficient: this is a natural monopoly, and the state regulates its prices. By law the state forbids creating artificial shortages, secretly agreeing prices with rivals and keeping rivals out of the market, and violators pay fines.