The reasons for a complete monopoly of the market are as follows:
1. The trend of production development. One aspect of forming a complete market monopoly is that when production and capital develop to a certain stage, production and capital gradually become concentrated. In the hands of a few large companies, it is easy for them to reach an agreement and form a complete monopoly market. On the other hand, after the concentration of production and capital develops to a certain stage, production and capital will inevitably be concentrated in a few large enterprises. It is not easy for these large enterprises to defeat each other in the competition and win alone.
2. Requirements of economies of scale. The exclusive manufacturer controls the supply of all resources. A company can produce goods at a price lower than the production cost of other companies or lower than the cost and price of the same production by several companies. Monopoly markets provide all supplies.
3. Requirements for the development of natural monopoly market industries.
4. Because a company can control the supply of all raw materials needed to produce the product. Controlling the raw materials of a product makes it impossible for other companies to engage in the production of the product and therefore cannot compete.
5. Because a certain company has a patent right to produce a certain product. In order to encourage invention and creation and protect the interests of inventors, governments of various countries have established many laws related to patent rights. During the period when a patent for an invention is valid, no other company may manufacture the same product and sell it on the market. In this way, having patent rights can form a monopoly.
6. Due to the government’s concession. Due to certain macroeconomic needs, economic security considerations, etc., if the government gives a certain enterprise the privilege to produce a certain product, the production and sales of the product will be monopolized by the enterprise with the privilege.
7. Due to "natural monopoly". The so-called natural monopoly refers to the production of certain industries. Due to the reason of "increasing returns to scale", ordinary enterprises cannot compete with them in terms of production costs.
This type of industry often requires large initial capital investment, so costs can only be effectively reduced when the output is large. In this case, generally small-scale enterprises will be gradually eliminated in this market. Or merger, the entire market only has the lowest cost when there is one large-scale enterprise, so the large-scale production enterprise forms a monopoly. This kind of natural monopoly usually occurs in public product industries such as water supply and power supply and in the transportation industry.