The three brothers monopolized the power supply, causing a total power outage in the community. Monopolizing a certain industry will be very harmful. This article takes the oil industry as an example.

First of all, monopoly will stagnate the development of the industry. The petroleum industry is a basic industry in the national economy and plays a strong supporting, driving and radiating role in a country's social and economic development. Based on the importance of petroleum resources and the characteristics of the petroleum industry, the market structure of the petroleum industry is mainly monopoly or monopolistic competition. However, the monopoly structure of China's oil industry has its own particularities. In China, the establishment of the three major oil group companies and the formation and maintenance of the oligopoly pattern in the oil industry are not the result of market competition, but the result of administrative power. This is an administrative monopoly. After the reorganization of the oil industry, there is no real competition between the three groups, and the harm of administrative monopoly to the oil industry cannot be underestimated.

The petroleum industry is a basic industry related to the development of the national economy. It not only has strict market access restrictions, but also enjoys various special preferential policies granted by the state. The oil industry has a monopoly on the country's oil resources and relies on executive orders to enjoy various privileges. However, the development rights and various preferential policies for this scarce resource are not available in other industries. Taking advantage of the particularity of the industry and the country's preferential policies can ensure long-term high profits in the oil industry. Due to the lack of strong state supervision and restrictions on the income distribution mechanism of the oil industry, these high profits can easily be converted into personal income or implicit welfare income for employees in the industry, resulting in a decline in wage levels in the industry. Employees in the oil industry are generally higher than those in other non-monopoly industries in the country. As a result, the income gap between the oil industry and other industries is widening.

Monopoly will lead to reduced output and increased prices, resulting in inefficient resource allocation, resulting in two huge economic losses: one is a net loss of social welfare; the other is a net loss of social welfare. The other is the transfer of consumer surplus. On the surface, the change in the remaining owners is just a transfer of wealth, with no real loss to the entire society. However, in order to obtain this part of transferred wealth, that is, rent, monopolies must invest a lot of resources in rent-seeking activities, resulting in huge rent-seeking costs. According to research by Tullock et al., the huge costs of rent seeking and rent protection will eventually dissipate, thus resulting in a net loss of social welfare. Like economic monopoly, administrative monopoly can also lead to a net loss of social welfare.