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In economics, a government-granted monopoly (also called a "de jure monopoly") is a monopoly of a product or service granted by government to an individual or organization/company. The government uses laws, regulations, or other mechanisms of government enforcement to forbid competition in the relevant area. Advocates of free markets include this type of monopoly under the rubric of coercive monopoly.
The term is distinguished from government monopoly or state monopoly, where the government itself has a (legally-enforced) monopoly.
Under mercantilist economic systems, European governments with colonial interests often granted large and extremely lucrative monopolies to companies trading in particular regions, such as the Dutch East India Company. Today, government-granted monopolies may be found in public utility services such as public roads, mail, water supply, and electric power, as well as certain specialized and highly-regulated fields such as education and gambling. In many countries lucrative natural resources industries, especially the petroleum industry, are controlled by government-granted monopolies.
Intellectual property protection
Many commentators have also pointed out that what are sometimes called intellectual property laws—laws granting protections through copyrights, patents, and trademarks—represent government-granted monopolies on the copying and use of particular items of information. It's worth noting, though, that intellectual property restrictions are usually motivated by concerns different from—indeed, opposite to—those that motivate other government-granted monopolies. Whereas other government-granted monopolies are usually motivated by a perceived need for greater public control over the accessibility and quality of essential goods and services, "intellectual property" monopolies are usually motivated by a perceived need for greater private control, by an artist or inventor, over the use and profits from their work. Similarly, whereas most other government-granted monopolies are accompanied with extensive regulations intended to prevent the taking of monopoly profits by the monopolist, "intellectual property" monopolies are usually granted with the express purpose that artists and inventors will reap monopoly profits from their work, giving them a greater incentive to persist in creative work, and preventing low-cost unauthorized copies from driving them out of the market.
See also
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