Monopoly refers to a market structure where a single seller or producer controls the entire supply of a particular product or service. This means the company has no direct competition and possesses significant power to influence prices, production levels, and market conditions. In a monopoly, the product offered typically has no close substitutes, making the firm the sole provider in the market.

The defining characteristic of a monopoly is the absence of competition. This allows the monopolist to set prices at a level that maximizes profits rather than relying on market forces of demand and supply. As a result, consumers often face higher prices and fewer choices compared to competitive markets. However, some monopolies exist naturally due to high entry barriers, such as infrastructure requirements or legal restrictions.

Monopolies can arise from several factors, including government licensing, control over scarce resources, technological superiority, or mergers and acquisitions. For example, public utility providers like electricity or water distribution companies often operate as natural monopolies because duplicating infrastructure would be economically inefficient.

While monopolies can lead to innovation and economies of scale in certain cases, they also pose potential drawbacks like reduced efficiency and consumer exploitation. To counter such issues, regulatory authorities such as the Competition Commission of India (CCI) ensure that monopolistic practices do not harm consumer interests or restrict market competition.

In conclusion, understanding monopolies is essential for investors, policymakers, and consumers to assess market dynamics. By recognizing the balance between market efficiency and fair competition, stakeholders can promote healthy economic growth while preventing the misuse of market dominance.