Monopoly

In procurement, a monopoly occurs when only one supplier supplies a particular category. Monopolies can occur due to barriers to entry such as patents, or through mergers or government licence. Monopolists have some or all of the following characteristics: they may maximise profit, set the price of the category in the marketplace and restrict the supply of the product or service. Monopolies are a form of market structure, and procurement strategies need to address the monopolist’s behaviour and the fundamental lack of competition. Market regulators may resist potential mergers and acquisitions that may create market dominance, and in some circumstances the planned merger may not be allowed. See also Market Structure.