What is a business monopoly?

A commercial monopoly in terms of economía refers to that market situation in which there is only one organization, entity or company that exercises control over the commerce of a specific geographic space. Therefore, by the concept of commercial monopoly we understand a commercialization in which there is no type of competition due to the control that is exercised by a single personality, since the commercial relationship with third parties is prohibited.

One of the most relevant examples of commercial monopoly in our history is the one that occurred in America in the hands of the Spanish Crown, in its desire to supply and control the supply of merchandise and raw materials from this region. All this directed by the Casa de la ContrataciĆ³n de Sevilla.

5 characteristics of the commercial monopoly

The main characteristics of the commercial monopoly are the following that we show below. Each and every one of these cases is perfectly recognizable in the Spanish commercial monopoly and the period it comprises.

  • Speculation: they are the order of the day in a market with these characteristics. For this reason, the production flow and the sales flow will always depend on the monopolizing country or institution.
  • Restricted sales, and the price of each product will always depend on the entity that governs said commercial monopoly.
  • There is no room for negotiation, and this is the main difference from the bilateral monopoly, since in these cases the commercial monopoly is the one who has the final decision on the price of each product or service, while in the case of bilateral the price of each product or service will be set by whoever has the highest degree of dependence.
  • Greater economic well-being for the monopoly collectors and greater poverty for the consumer because they do not have a large supply, therefore, said consumer ends up suffering the consequences of the lack of competition in the market.
  • The entity that controls the monopoly has the presence of agents and subcontractors for the exercise of its activity, in such a way that they are the ones who can be in charge of the commercialization of the product at the market, thus enjoying a privileged situation.

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