Franchised Monopoly

A monopoly that is approved and supported by the government.

Monopolies are corporations that completely and totally dominate their market sector. By and large, American economic policy tends to frown on monopolies; we usually prefer open markets and competition. We think consumers usually end up with a better-priced, better-quality product that way, and we have many antitrust laws on the books to make sure monopolies don’t form.

But every once in a while, a special monopoly with a certain je ne sais quoi comes along and the government says, “Yeah, this is good stuff—this monopoly is going to result in a better good or service being produced and consumed.” And when that happens, a franchised monopoly is born.

Franchised monopolies are an important part of our daily lives. The U.S. Postal Service is a franchised monopoly: nobody but nobody else gets to deliver our mail. And probably our electricity and natural gas providers are franchised monopolies, too. Sometimes, when companies compete, the consumer loses, and franchised monopolies are there to help make sure that doesn’t happen.