What are the necessary conditions for a monopoly position in the market to be established?

A monopoly is a market structure where a single firm sells the dominant share of the goods and services in a market. A monopoly occurs as a result of barriers to entry. This means that something is stopping other firms from entering this market. These barriers might not last forever and when they are reduced or removed, the market changes from a monopoly to a more competitive market structure.

Here is a list of potential barriers to entry:

• Private property: If a single firm owns the resource that's used to make or sell a good or service, other firms will be unable to compete
• Government Regulation: Sometimes governments will enact regulations that keep out new competition because they have decided a single firm's production is better for society.
• Government ownership: Governments will sometimes own the production of the good or service and it is illegal for new firms to enter.
• Technology: A firm might hold onto a technological secret that allows the good or service to be produced. These are sometimes called "trade secrets" and the recipe for Coca-Cola is a common example.
• Lowest cost production: If a single firm can produce the good or service at a lower cost than a new entrant, this will act as a barrier since new firms realize they will be unable to compete. This situation is often referred to as a natural monopoly.
• Geography: In some cases, there is only a single producer in a community, which results in a geographic monopoly. This is a low barrier to entry and the firm with the monopoly earns large profits, new entrants will likely show up.