When you have to deal with all that competition and whatnot, it’s difficult to maintain monopoly status in a free market.
With other companies’ low prices and new, updated products entering the market on a daily basis, Rich Uncle Pennybags appear to be a thing of the past. But don’t worry!
The world’s politicians would like to give anyone who is dead set on controlling an entire industry a chance to shine. So come one, come all — government agencies, cronies, and all their friends — as we present the best ways to create a monopoly and avoid competition forever.
Regulations
Increase the cost of doing business when it is already high. Small businesses cannot survive government-imposed regulations, whereas larger businesses can bear the burden, at least temporarily. Taxes, mandates, and, in particular, “safety regulations” (e.g., clinical trials at the Food and Drug Administration) will annihilate your competitors before they even have time to ask what the new rules mean.
Then, in Washington, hire a lobbyist. I’m sure he or she will come up with a compelling reason why the industry should follow stricter and more costly guidelines.
Subsidies
There are no such things as free lunches. However, when the government pays for it, the lunch certainly tastes free. Subsidies provide a consumer-driven alternative to acquiring monopoly status.
Government revenue increases will allow you to reduce prices to almost nothing while still remaining profitable. You can give away (what used to be) a $10.00 item for free and stay afloat with the help of $1 million in subsidies from our nation’s capital. Your competitors, on the other hand, will have to deal with reality.
Even if they manage to reduce prices to $1.00 per unit, what kind of customer will turn down free?
The subsidy does not have to be in place indefinitely. Without transaction revenue, it will only be a matter of weeks before your competitors begin to default on paychecks and other loans.
You can also go this route without relying on government revenue injections if you have a bailout plan in place. Both you and your competitors will declare bankruptcy, but only one (hopefully you) will be granted CPR.
Nationalization
Greetings to government officials! This is for you. The simplest and most direct way to establish a monopoly is to simply write the monopoly into law. Controlling an entire industry by the federal government, as we have done with the US Postal Service, effectively prevents private-sector competition.
But never, ever mention the USPS. With its inefficiency, perceptual deficits, and general disregard for any sense of advancement in mail delivery, it’s a terrible (albeit realistic) example of a government monopoly.
Rather, tell everyone you want to monopolize “for the good of the people,” and then talk about the Department of Education or some other public-sector operation that people don’t like to criticize in public.
Tariffs
Neighbors can be bothersome. Some neighbors are annoying, while others are strange, but the absolute worst neighbors are those who compete with you in the marketplace (and then win). Mexico is this neighbor in the beautiful Southwest.
Companies south of the border produce certain commodities much more cheaply than American companies, and they have the audacity to believe that they can export their cheap products to the US on the spur of the moment. We don’t believe so. Don’t let foreign companies treat customers as if they own the place if they sell sugar for $2.00 per pound and you charge $3.00. Make sure they pay a $1.01 import fee, and you’ll win new customers one cent at a time.
Better yet, propose a total ban on the sale of foreign goods in your state, city, and town until you’re so cut off from the rest of the world that no one has a choice but to buy from you.
Intellectual property rights
Why should you let someone else have the same good idea as you? Take that concept, write it down in the broadest terms you can think of, and send it to the United States Patent and Trademark Office, where public officials will (hopefully) grant you the exclusive right to use it. And don’t worry, if someone else comes up with the same idea one day later… too bad. You came in first.
Even if someone halfway around the world independently comes up with the same idea… too bad. You came in first. Make the most of your monopoly. Put a high price on that beast and feel free to disregard quality.
Powerful Distributor Network
A strong distribution channel with business partners is required to gain a competitive advantage. A long-term relationship can be ensured by providing adequate marginal value to the intermediaries who are directly or indirectly involved with the business. This strategy aims to raise the market’s entry barrier.
Exclusive Technology
Your technology’s uniqueness not only allows you to boost your company’s competitive advantage but also makes your product impossible to replicate. Another type of licensing strategy that allows businesses to build customer loyalty.
Significant capital investment
You can create an entry barrier by investing in new technology, as Reliance has done with its “JIO” marketing strategy in the networking segment. A new invention or piece of research tends to create a market monopoly. Existing firms can also create an entry barrier by investing in new market technologies that meet market demand.
