ABSTRACT
This chapter begins by working through the mainstream economics model of profit maximization in monopoly markets. It discusses the best options for regulating natural and non-natural monopolies, and why monopolies are considered inefficient from a theoretical perspective. The chapter deals with a section on the prevalence of monopoly power in modern capitalism that has led political economists to label the current economic system as monopoly capitalism. It explains what a natural monopoly is and why economists prefer to have one firm in such industries and examines different policy options for regulating different kinds of monopolies. The chapter analyzes the different views of monopolies and monopoly power by Austrian mainstream and political economists. Although most economists from Adam Smith to Karl Marx view monopolies as problematic, there are some complexities in the debate over the role and behavior of monopolies. Political economists see monopoly power as one of the great evils of modern capitalism.
