Competition and Monopoly
Competition is when many firms sell similar goods, while a monopoly is when one firm dominates a market.
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Competition is when many firms sell similar goods, while a monopoly is when one firm dominates a market.
- Competition lowers prices and improves quality
- Monopolies can charge high prices
- Governments may regulate monopolies
🧠 Quick quiz
Three questions. Score 2 or more to complete the topic.
What is Competition and Monopoly?
Within Economics & Civics, which covers money, markets, business, government, law and citizenship: how societies are organised and run, this topic explains Competition and Monopoly. Economics and civics topics explain how money, markets, laws and government affect people, so each topic here pairs a clear definition with a model.
Check that you can explain Competition and Monopoly in your own words and give one example from everyday life. If you can do that, you have understood the core idea.
Understanding Competition and Monopoly helps you read the news critically and weigh up policies, choices and arguments about society.
Competition and Monopoly in detail
In a competitive market, many firms sell similar products, so no single firm controls price, and competition encourages lower prices, better quality and innovation. In a monopoly, one firm dominates the market, which can limit choice, raise prices and reduce incentives to improve.
Between them are oligopoly (a few large firms, such as supermarkets and mobile networks) and monopolistic competition (many firms with differentiated products). Governments use competition law and regulators to prevent abuse of market power and unfair mergers. Some monopolies, such as water supply, exist because duplication would be wasteful, and are regulated.
How the interactive helps you understand Competition and Monopoly
Watch the bar chart in the interactive. Use any sliders or buttons it offers to change the values and see how the bar chart responds.
Before you change anything, predict the result. Then change one value at a time and check whether your prediction was right. This is a quick way to build a correct mental model of Competition and Monopoly.
Real-life uses and examples
- Give a balanced answer about Competition and Monopoly by considering more than one point of view.
- Relate Competition and Monopoly to a news story about prices, jobs, elections or government spending.
- Use Competition and Monopoly to weigh up the pros and costs of a policy or decision.
Common mistakes to avoid
- Confusing a short-term effect with a long-term one.
- Giving an opinion without evidence or a clear economic or civic reason.
- Learning the definition without testing it. Use the quiz and the interactive to check that you can apply the idea.
Frequently asked questions about Competition and Monopoly
What is Competition and Monopoly?
Competition is when many firms sell similar goods, while a monopoly is when one firm dominates a market.
What are the most important points about Competition and Monopoly?
The main points are: Competition lowers prices and improves quality; Monopolies can charge high prices; Governments may regulate monopolies.
Why is Competition and Monopoly useful?
Understanding Competition and Monopoly helps you read the news critically and weigh up policies, choices and arguments about society.
How can I practise Competition and Monopoly?
Open the interactive at the top of this page and change the controls one at a time. Predict the result before each change, then take the three-question quiz. A score of two or more marks the topic as complete on this device.
Which topics are related to Competition and Monopoly?
Related topics in Economics & Civics include Banks and Saving, Insurance and Risk, Unemployment.