Legal monopoly

A legal monopoly, statutory monopoly, or de jure monopoly is a monopoly that is protected by law from competition. A statutory monopoly may take the form of a government monopoly where the state owns the particular means of production or government-granted monopoly where a private interest is protected from competition such as being granted exclusive rights to offer a particular service in a specific region (e.g. patented inventions) while agreeing to have their policies and prices regulated. This type of monopoly is usually contrasted with de facto monopoly which is a broad category for monopolies that are not created by government.

History

Jurisdictions have at various times imposed legal monopolies on various commodities, including salt, iron and tobacco. The English Statute of Monopolies of 1623 was an early step in an English movement to convert letters patent from a method of rewarding royal favourites at other than royal expense, to a method of encouraging inventors.

The British East India Company (1600), Dutch East India Company (1602), and similar national trading companies were granted exclusive trade rights by their respective national governments (monarchs). Private interlopers were subject to criminal penalties, and the companies fought wars in the 17th century to delineate and defend their monopoly territories.

Legal monopolies on alcohol remain commonplace, both as a source of public revenue and as a means of control, and the monopolies on opium and cocaine, formerly important for revenue, were converted or reinstituted during the twentieth century to curb the abuse of controlled substances. For example, Mallinckrodt Incorporated is the only legal supplier of cocaine in the United States.