Most economists regard monopoly as an exceptional case in a modern economy. In an economy populated by alert profit-seekers, it seems that any profitable monopoly would quickly attract competitors. For a monopoly to be stable, there must be some "barrier to entry." The assumption of free entry into the industry should not apply. Thus, we ask what might create the exception, what might "cause" a monopoly, and what the "barrier to entry" might be.
Following are some of the causes of monopoly
• Patents and other forms of intellectual property
• Control of an input resource
• Government
• Decreasing cost
• Crime
Patents and Other Forms of Intellectual Property
Patent law is designed to increase the incentive to invent new methods of production and new goods. The inventor is granted a temporary monopoly on the use of the invention. The idea behind this is that the patent makes the invention more profitable, during the term of the patent, and that these profits encourage inventors. So, it increases the rate of technical progress.
