Monopoly market | Market failure

That a monopoly market can arise is seen as a market failure in economics. A monopoly market gives allocation losses in the economy.

A monopoly market means lower production and higher prices compared to a perfect market. A monopoly market can be regulated by legal rules that make the allocation loss disappear. Some monopoly markets arises because there is a natural monopoly. Natural monopolies are markets where there are large economies of scale, a market where it does not work with competition. An example of a natural monopoly is state railways or telephone nets.