What defines a monopoly?

A monopoly is characterized by a market structure where a single seller dominates the entire market. This seller has significant control over the supply of a product or service, which allows them to influence the market price substantially. In this scenario, the presence of only one seller means there is no competition, which can lead to higher prices and reduced incentives for innovation or efficiency.

This market structure often arises in industries where it is impractical for multiple firms to operate due to high barriers to entry, such as substantial startup costs or control over critical resources. In a monopoly, consumers have limited alternatives, which distinctly contrasts with markets that feature competition among multiple sellers. Thus, the defining characteristic of a monopoly is indeed the presence of one seller with considerable power over both supply and price levels within that market.