When one organization is providing a service and it does not have any competition, the economic scenario is called monopoly. Usually, government organizations operate in a monopolistic approach. Monopoly has both negative and positive shades. Let’s have a look at the positive ones first. When only one organization is providing a certain product or service, everything is centralized. The level of quality does not vary. All the customers get the same standard of service. In addition to that, as there is no competition, the level of monitoring is very high. National telephonic service providers, electricity providers and gas companies are some examples of monopoly.
Now, let’s turn our attention towards the negative aspects. When there is no competition, the price can be extremely high as another company is not providing a similar service. As I mentioned above, the government keeps a check on monopolistic companies. The important thing is the strength of this check. The government of a country may not implement very strict regulations on these companies as an alternate does not exist.
With the present economic environment, it is hard for monopolistic companies to survive. Hence, some departments or portions are privatized so that conditions become easier for the consumers. Monopolistic companies come under direct supervision of the government. In this way, their share prices do not change by big margins. There is a very strong influence of external economic factors on these prices. In other words, they can change rapidly with adequate changes in government policies.