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Why is there a monopoly?
In the development of capitalist economy, free competition leads to concentrated production, and when it reaches a certain stage, it will inevitably lead to monopoly. When monopoly replaces free competition and occupies a dominant position in economic life, capitalism develops to the stage of imperialism, that is, monopoly capitalism. There are three main reasons for the formation of monopoly:

1. Natural monopoly: The production cost makes one producer more efficient than a large number of producers. This is the most common form of monopoly.

2. Monopoly of resources: the key resources are owned by one enterprise (such as the dubbing industry of wireless TV).

3. Administrative monopoly: The government gives enterprises the exclusive right to produce a certain product or service. There is also a monopoly by the government itself, which is called monopoly.

As an economic phenomenon, monopoly appears in capitalist society, which is the opposite of competition and the inevitable result of competition development. Lenin also pointed out that when concentration develops to a certain stage, it can be said that it naturally moves towards monopoly. Because dozens of large enterprises can easily reach an agreement with each other; On the other hand, it is the huge scale of enterprises that causes the difficulty of competition and the trend of monopoly.

Extended data:

It is generally believed that the basic reason of monopoly is entry barrier, that is, monopoly manufacturers can maintain their position as the only seller in the market because other enterprises cannot enter the market and compete with them.

Institutional monopoly competition is characterized by the differences in institutional arrangements between areas with monopoly rights (monopoly areas) and areas without monopoly rights (non-monopoly areas).

1. Difference in the number of supply systems: The biggest difference between monopoly areas and non-monopoly areas is that the number of systems available for supply selection or arrangement in monopoly areas is far greater than that in non-monopoly areas.

2. The difference of system supply level is mainly reflected in two aspects: first, the core system only allows innovation in monopoly areas, and non-monopoly areas cannot get their hands on it. Second, there are many anticipatory systems with institutional needs, which only allow monopoly areas to take precedence, not non-monopoly areas to take precedence, and not allow follow-up.

3. The right difference of institutional supply: The monopoly field not only has greater rights in the choice of the quantity and level of institutional supply, but also has various rights that the non-monopoly field does not have in terms of institutional innovation, institutional exploration, institutional design and institutional income distribution.

The biggest difference between monopoly competition and enterprise monopoly competition is that institutional monopoly competition is exogenous, while enterprise monopoly competition is endogenous and exogenous, and even some enterprise monopoly competition originates from institutional monopoly competition. The fundamental purpose of competition is to obtain the potential benefits of the expected system, promote the rapid development of local social economy, and be in a favorable position in regional competition.

Under the demand-induced institutional change, the institutional arrangement is to pilot first and then popularize. However, if the timing of the pilot is not well grasped, the institutional arrangement and innovation in the pilot area will continue, which will have greater institutional advantages compared with other areas and will form institutional monopoly competition.

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