MONOPOLY REAL LIFE EXAMPLES

Example 1
1.Carnegie Steel Company created by Andrew Carnegie (now U.S. Steel). From the late 19th century
to the early time of the 20th century, Carnegie Steel Company maintained singular control over the
supply of steel over the market. Carnegie Steel Company during the period of monopoly was
effectively setting the price for the steel nationally without the free market competition. The
regulation of the Government was not present initially. Andrew Carnegie was successful in creating
the monopoly for a long time in the steel industry after which J.P. Morgan took possession of the
company by buying it and melded the same into the U.S. Steel

2.Another famous example of a monopoly of historical significance is the American Tobacco

Company. This company maintained singular control over the supply of Tobacco over the market.
Government regulation was also not present initially. However, this company got dismantled after
the creation of the antitrust regulation in the form of the Sherman Antitrust Act. The Supreme court
in the year 1911 ordered the American Tobacco Company to dissolve.

Example 2 – Luxottica
Most of us have never heard of the company ‘Luxottica’ despite the fact they are the biggest
manufacturer of glasses in the world. It is founded in the year 1961 in one of the small villages in
Italy. It started a business at the International level in the early ‘80s and it started taking over the
other eyewear company whichever it can afford. Many sunglasses companies of international levels
are selling their sunglasses in their own brands like Ray-Ban, Vogue, Killer Loop, T3, Armani, etc. It
has also controlled the prime vision care provider in the United States such as Eye Med and Vision
Care. It is one of the examples of a monopoly.

Example 3 – Google
One can’t even think of the internet layout without Google. Its competitors are Microsoft and Yahoo
but they own a very small share in the market that too in the downward trend. Google makes the
majority of money from advertising and the same can be clearly seen that it controls 60% of the
global advertising revenue. It has a good revenue generation through the process of harvesting user
data with the track over our online activity and popping up with the advertisement as per our
searching history and locations. Smaller advertisers lag as they are not having the level of user data
as Google is having. Thus Google undoubtedly is one of the largest monopolies in present in the
world. The company, in fact, monopolizes several other different markets in the world.

Example 4 – Natural Monopoly

The rare availability of natural resources like oil makes it create a monopoly called a natural
monopoly. John D Rockefeller who was the founder of Standard Oil along with his partners took
advantage of both the rarity of resource and price maker.

At the earlier time when there were a lot of oil companies who were manufacturing most of their
finds, companies hardly bother of environment and pump waste product directly into the river
without undergoing to the cost of researching proper disposal. They were also using a shoddy
pipeline which was very prone to leakage. Later standard oil started creating a monopoly along with
developing infrastructure aiming to cut down the cost and dependency. Despite the eventual
breakup of the company in 1911, the government understands that this upcoming monopoly will
create a reliable setup, infrastructure and deliver low cost. The profits of the standard oil and a good
trend of dividend helped in gaining investor trust and thereby resulting in more investment from the
investors which helped it to grow larger further.

Example 5 – AB InBev

The company came into existence after the merger of two huge brewing companies named
Anheuser Busch and InBev. After the merger, they become the distributor of over 200 types of beer
across the world. Many well-known companies like Budweiser, Corona, Beck’s, Stella Artois, Leffe,
Skol, Hoegaarden, etc are selling beers in their name by purchasing the same from AB InBev. The
marketing companies of beers might be different but their manufacturers are the same.

Example 6 – Social Media Market

The social media market which we can’t think is ripe for monopoly but it is. Facebook is the leader in
the social media market with a maximum percentage of the market share. It is considered to be a
monopoly because it lacks direct competition for any competitor, it has the pricing power and it has
the dominant user base all over the world.
Moreover, in the year 2014, it also acquired WhatsApp who was giving good uptrend competition to
Facebook in the social media segment. In this way, almost the majority of share for the social media
market lies with Facebook only. Thus Facebook is a good example of a monopoly in the social media
market.

Conclusion – Monopoly Examples

Thus monopoly is the industry or the sector which is dominated by one firm or corporation. It is the
market structure that is characterized by the single seller who sells his unique product in the market
and becomes large enough for owning all the market resources for the particular type of goods or
service. For controlling and discouraging the operations of the monopoly, different antitrust laws are
put in the place. These antitrust laws help in prohibiting the practice of restraining the trade and
allowing free trade and competition in the market, thus protecting the consumers. Thus the above-
mentioned examples are some of the examples of monopoly in the different industries. There are
various other examples as well which shows that a monopoly exists in various different markets or
areas.

OLIGOPOLY REAL LIFE EXAMPLES

There are ample of examples for oligopoly. In the current scenario, the number of these type of
players is increasing. It is totally the opposite of a monopoly. These allow multiple competitors to
coexist. So consumers are having a list of companies for a particular sector. These are prevalent and
that too within the wide cross-section of industries. Some of the common industries sectors where
we can see it are Aviation Industry, Media Industry, Pharma Industry, Telecom Industry, Media etc.
Oligopoly Example #1 – Technology Industry
The computer technology sector shows us the best example of oligopoly. Let us list out the
computer operating software and we will find out the two prominent name Apple and Windows.
These two players have managed the majority of the market share for long. There is one more player
in this oligopoly named Linux Open Source. But apart from these three, there are hardly any players
in this sector as they command almost 100 % of the global market share. The computer can be of
any brand but the operating system will be for sure from any of the aforesaid three. They have
achieved this stage because of two primary factors.

One is the brand image and trust they have created in the eyes of consumers and secondly the lack
of players who can stand in front of these 3 at the same time building trust among consumers.
Moreover, their dominance in this sector gets increased as the majority of computer software’s
made are compatible with these three operating systems which in turn is making this oligopoly self-
sustaining. Their innovations into their sector also keep them unique which helps them create an
ecosystem that completely sustains their growth

The same is the case for an operating system for smartphones where the majority market share is
captured by Android & iOS. These companies are coexisting without creating a threat to others

Example #2 – Media Industry

Let us take the media sector in the US where almost 90% of this sector is being captured by 5-6
players. At the same time, a 10% share is being captured by the other small players who command
the chunk of viewership which includes the likes of Viacom, Disney, Time Warner, NBC. They capture
a significant share in terms of operating rates and usage terms. When we look at the overall prime
time programming and content selection we will observe that there is also considerable unity

It means if they keep the same primetime on every channel then their viewership will be diversified.
In that case, not a single player will be able to take the edge. So what they follow through their unity
is looking out for the share of the same viewer base by deciding the prime time for individual
channels mutually. By following this even though their scalability of the TV channels will get limited
to an extent but across those ranges, all the players can co-exist and that too with relative gains.
They are not supposed to face any cut-throat competition. As a result of this oligopoly, the relative
cost will also come down for new foray.

Oligopoly Example #3 – Automobile Industry

The automotive sector in the United States shows a unique example for oligopoly. The trinity of
Ford, Chrysler, and GM has come into the limelight because of technological excellence. They have
offered stiff challenges and competition to the major players across the world. They have smartly
dominated the entire space in the US local markets. They are referred to as Big Three in the US
automobile sector which shows they hold a unique position there. They have single-handled the
service automobile demand in the period 1950-1960 and they also earn a huge margin. It can be
apparently seen the synchronized collusive actions taken by these three players.

It can be seen in their decisions of launching small cars, the sequence in which they rose the prices
of cars which clarifies that these three players took a united and well thought of strategy. One may
distinguish among the three on the basis of prices but on the basis of features, all are distinct. The
trend between the periods 1960 – late 1970 was like Chrysler will announce the price rise first;
second price rise will be announced by the General Motors. The strategy was that General Motors
will announce in price rise less than that of Chrysler. Then Chrysler will reduce its price to General
Motor’s level. Further Ford joins them in raising the price and all three settle to the price of the ford.
However, this oligopoly is blamed as the main cause of the downturn in the US automobile sector.

Oligopoly Example #4 – Pharma Sector

The pharma sector is globally dominated by some key players. They are not only the leaders in new
drug innovation but are also the price maker for drugs. The top three companies which we can refer
to in our example are Novartis, Merck, and Pfizer. The threat of new entrant to this sector is the
fairly limited reason being the whopping expenses which have to be met in developing a new drug.

Patents are being registered for the drugs which are in circulation which enable easy resolution of
the issue at the same time it protects the new drug from potential competition. As a result, they are
able to create an edge from their experiences which will help them in succeeding in the future as
well. The oligopoly here works as a symbiotic fashion.

Conclusion
The aforesaid examples of oligopoly highlight the different aspects. The economic arrangement is
the primary means which will help in getting a level playing field. But at the same time from the
examples mentioned above, we can conclude that oligopoly is not conducive to raising a healthy
competition. The downfall of the US automobile sector is a burning example discussed in example
three related to the Automobile sector. Here each player aims at pulling the other down and focuses
less on innovations.

The new entrant cannot easily enter because of barriers. Moreover, the high concentration reduces
consumer choices and the consumers are being treated for granted by the companies. At the same
time oligopoly helps in lowering the average cost of production of goods. If the extra profit
margin is being used in innovations then this suits companies having high R&D costs.

MONOPOLISTIC COMPETITION REAL LIFE EXAMPLES

Example #1 – Coffee Shops or Houses or Chains
Coffee shops or houses or chains are a classic example of monopolistic competition

A Large number of sellers

Coffee has a very large number of sellers including hundreds of reputed global coffee chains, local
coffee houses and tons of street coffee vendors.

Product is Similar but not Identical

Let’s say Starbucks of the USA called the king of all coffee chains has a presence in over 65 countries
of the world and Costa Coffee, the best coffee chain in Europe comes second in world rank after
Starbucks.

The two globally reputed coffee chains that both sell a similar product ‘coffee’ but the coffee is not
the same at both the outlets. A Difference is created by the quality of coffee, customer service or
hospitality, and prices. Both the coffee houses are healthy competing to serve better products and
services.

However coffee is not just served by Starbucks or Costa but there are various big global coffee chains
other than these two like Dunkin Donuts, McDonalds or McCafe, etc.

Non-Price Competition
Note that one of the defining traits of a monopolistic competitive market is that there is a significant
amount of non-price competition. I.e. firms cannot compete upon prices

For example, a street vendor is offering coffee at $0.5 per coffee cup but Starbucks charges about $5
for a single cup of coffee. Now the street vendor cannot compete Starbucks on the basis of charging
low prices because Starbucks differentiate its product through the quality of their coffee, expensive
crockery, better hospitality, the infrastructure of their coffee houses, etc.

Less Pricing Power

Unlike firms in perfect competition where they have negligible pricing powers and prices are fully
dependent on markets, firms in the monopolistic competition have low but little power over prices.
Different firms can charge higher or lower based on product differentiation.

For example, Costa Coffee has higher rates as compared to Starbucks and they both charge much
higher prices than a street vendor. However, the demand for coffee is very high since every coffee
seller gets its customers.

Low Barriers to Entry and Exit

Due to a monopolistic competitive market, the coffee business has low barriers to entry and exit.
However, the existing or established businesses of the market want barriers to be high.

Governmental regulations are less, other than essential food quality standards; the coffee business
has no other strict governmental obligations to be followed.

Example #2 – Farmers
From coffee shops, we next come to coffee producers. This example talks about farmers who
produce food for the entire 7.7 billion population of the world and about 80% of the world’s food.

Farmers also work in a monopolistic competitive market where a large number of farmers (there are
around 570 million farmers all around the world) produce various similar crops which can be
differentiated based on quality, size, etc.

Let’s take the example of a very famous summer crop called ‘Mango’ (Mangifera indica).

A Large Number of Sellers

India the largest producer of mango has a large number of mango cultivators.

Product is Similar but not Identical

In India over 1000 varieties of mangoes exist, where only 20 varieties are commercially cultivated
and only 5 of them are exported including Alphonsus.
Product Differentiation
The most important factor to differentiate mangos is through quality; say whether it is organic or
inorganic. If it is inorganic then the level of usage of chemicals (including pesticides and chemical
fertilizers) affects quality checks.

Less Pricing Power

Generally, the market rates of mango or any other crop are not decided by the farmer. Prices are
mainly dependent on demand and supply chain, governmental influences, and a variety of mango.
However, being a seasonal crop demand remains high thus level of supply inflates or deflates price
structure. Mango being a perishable product, its quality also affects prices.

Low Barriers to Entry and Exit

The business of farming has low barriers to entry. The startup cost is low excluding purchasing cost
of land or if the land is taken on lease. However farming business is mostly hereditary all around the
world where the farming lands are inherited from generation to generation. In other cases, the
government of every nation provides incentives to new farmers and helps them with money,
technology, and education.

Example #3 – Retail Industry

This is a prime example used by various economists to explain the monopolistic competitive market.

The retail industry consists of vast markets that include various goods and brands with a single
common goal of selling their products rapidly.

A Large Number of Sellers

Apart from a large number of small local retailers conducting grocery stores or a clothing outlet,
there are elephant huge players which are globally popular as well as world leaders of the retail
industry like:

Wal-Mart is the biggest retailer in the world. It has recently entered into the E-commerce business
by acquiring Flipkart, India’s largest e-commerce company. Amazon is the biggest online retailer in
the world. And Alibaba is another major global giant in the retail industry.

Product Differentiation
In the retail industry, companies can differentiate their products by using color, size, features,
performance, and accessibility. Companies use heavy advertising and apply various marketing
strategies to make their product look more appealing to customers than other similar products.

Differentiation can also be made through a better distribution structure. Online selling provides an
advantage over other retailers.

Less Pricing Power

Customers have full knowledge about the market, the brand, and the product, thus sellers cannot
artificially inflate product prices, otherwise, customers will be forced to buy the substitutes of even a
well-known brand.
Low Barriers to Entry and Exit
Entry to the retail industry is very easy, even an individual can enter with the most basic
governmental obligations and licensing. The initial cost varies depends on the level of business e.g. a
small grocery store with very basic items requires very less amount of money, but to start a mall that
includes every aspect of retailing needs huge fundsFor example, the coffee business has low startup
costs, i.e. low capital expenditure on property, plant, and equipment. In fact, lots of street vendors
offer good quality coffees at cheaper rates which are served on small food trucks or stalls.

PURE COMPETITION REAL LIFE EXAMPLES

In the real world, it is hard to find examples of industries which fit all the criteria of
‘perfect knowledge’ and ‘perfect information’. However, some industries are close.

1. Foreign exchange markets. Here currency is all homogeneous.

Also, traders will have access to many different buyers and
sellers. There will be good information about relative prices.
When buying currency it is easy to compare prices
2. Agricultural markets. In some cases, there are several farmers
selling identical products to the market, and many buyers. At the
market, it is easy to compare prices. Therefore, agricultural
markets often get close to perfect competition.
3. Internet related industries. The internet has made many
markets closer to perfect competition because the internet has
made it very easy to compare prices, quickly and efficiently
(perfect information). Also, the internet has made barriers to entry
lower. For example, selling a popular good on the internet
through a service like e-bay is close to perfect competition. It is
easy to compare the prices of books and buy from the cheapest.
The internet has enabled the price of many books to fall in price
so that firms selling books on the internet are only making normal
profits.