A monopoly is the existence of a complete and exclusive market or group of consumers for a product or service where all who are in the market and who are willing to buy are unable to sell the product or service to anyone else.
When we look at monopolies, we usually think of a physical, legal monopoly. But in fact monopolies can be in any product, service, or industry where there is a monopoly in the form of a single firm or group of firms. They are the most common form of economic control and the most common form of monopoly.
When a company creates a monopoly, everyone who is in the market for the product or service also has a market. They can’t sell to everyone else. This is the definition of a monopolist.
When it comes to monopoly, an oligopoly is a combination of two or more firms that don’t produce the same product or service, but produce the same amount of it. An oligopoly is a perfect example of a monopoly. If Netflix and Amazon were to have an exclusive contract to sell DVDs, they would be considered oligopolists. Instead, they are both monopolies (both of which have a market). The reason for this is because they produce the same amount of DVDs.
For example, when Netflix is given exclusive access to a certain amount of DVDs, they can charge more to get their DVDs. They can also charge more to get the DVDs that they don’t have access to. This makes them less valuable to the rest of the market, and in turn, less profitable.
Oligopoly is often defined as being the best of both worlds. For example, in the movie rental game, they are both monopolies. What this means is that in order to compete with another movie rental service, you need to use a different method of payment (e.g. credit card, etc).
This definition of oligopoly is based on how the market is set up. In the movie rental business, you can only rent one movie in the same day (one movie per rental), or you need to either pay an increased price (you cant keep renting the same movie multiple times) or you need to get a different movie. In the movie streaming business, you can only play one movie, or you need to pay for a different movie.
This is not to say that the movie streaming business is a free-for-all, and it’s not. The company you work for can set the price you pay, but the market decides how much you pay. For example, Amazon has no problem setting the price of a movie, but is not required to also set the price of a movie that you stream.
The movie streaming business is where the problem lies, particularly in the case of Netflix, which has become a monopoly. While Amazon isn’t a monopoly, Amazon has taken advantage of its enormous scale to use Netflix’s dominance to its advantage. Amazon is making money when they buy movies, but as you can imagine, they’re only making money by increasing the price of the movie that they own. Netflix is not required to pay for anything.
The problem here is that the movie streaming market is essentially oligopolistic. The number of movies being offered on its platform is limited by the number of people who have access to Netflix, and even if you do get one movie, it won’t be the best movie you’ve ever seen. Netflix is merely selling you a subscription to a service that is free for a limited time. So while Netflix does make money, theyre still charging you for something that can’t be provided for free.