Modern Economics - Monopolies

Part 7: Monopolies

In order to understand how the global economic system works today, it is important to examine just how centralised the economy has become. The reality is that more and more of the world’s assets, property, goods and resources are controlled by small and concentrated elite ([insert sarcasm] shock horror, l know!) Walk into any major supermarket today and look at the glistening, colourful labels around you; they give the impression of an open, free market of mutually beneficial trade and commerce, ‘the invisible hand’ at work, all for the benefit of you, the consumer. But look a bit closer and dig a little deeper and all is not what it appears.

Let’s begin by looking at the different types of market structure: this includes perfect competition, monopolies (one producer), duopolies (two producers), contestable markets or oligopolies (a few producers). The reality is, however, that many industries are now dominated by either a monopoly (or monopolistic conditions) or an oligopoly, leading to market dominance by a few actors, predatory pricing and the ability to set wages.¹ This structure operates locally, nationally and internationally.

There are many disadvantages to monopolies, these include:

• Most notably, monopolies can lead to higher prices for consumers,

• They don’t have to reduce costs or become more efficient,

• Less incentive to innovate and improve,

• There is less choice for consumers,

• Monopolies can accrue large amounts of political power to shape markets and even society to their advantage. The big tech monopolies are a prime example of this (as we will see shortly).

The United States has a long history of monopolies dominating markets such as steel, beef, sugar, oil, cotton, shipping, railways and more.² Many of the founders of these market-dominant companies – Rockefeller (Standard Oil, oil and gas), Vanderbilt (rail and shipping), Carnegie (Carnegie Steel Company, steel), to name but three – are credited with being some of the most influential men in helping to build the American century. Many of these monopolies were eventually broken apart by antitrust laws in the late-19^th and 20^th century.

For monopolies, their market dominance (as in, the percentage of the market they control) and huge reserves, assets and capitalisation means it is impossible to compete with them. They often benefit from Monopolies are able to sell below the price of production in order to squeeze other competitors out of the market. Consider the following example, if l were to bring out a washing-up liquid to compete with Fairy Liquid, one of the biggest washing-up liquid brands in the UK. Well, firstly Fairy Liquid is not the name of the company that produces this product, that company is called Proctor & Gamble (P&G) and they are a giant multinational American consumer goods company. Their annual revenue for 2024 was a light $84 billion, additionally they have assets totalling $122 billion. Now, just for the record and for the purpose of this example, l do not have anything near this level of revenue or assets. So, where does that leave me, you might be asking. Well, even if my washing-up liquid does really well (high volume of sales [at least initially], good press and media coverage, strong brand identity, a good share price even) eventually P&G will cotton on to this and they will start to adjust their strategy accordingly. They can sell below the price of production, say at £1 per bottle .50p goes on staff, utilities and rent (business costs that are all unavoidable), so l can’t afford to fall below the price of .50p per unit, well P&G can because of their revenue and assets, they will ride out the proverbial storm till l am effectively put out of business by these market conditions. I’ll either be forced out of business altogether or bought out.

Companies with significant cash reserves can effectively buy out their competitors or other leading companies, allowing them to expand their influence and become more powerful both in their core market and other markets as well. Their huge cash reserves and operating capital is largely the result of, among other things, their power as a monopoly. For example, Google purchased its operating system, Android, for $50m in 2005 from Android Inc. It also purchased its biggest rival in the ad space sector (called DoubleClick) for $3.1 billion in 2007. Consider the following:

Google acquired YouTube (for $1.6 billion in 2006);

Facebook (meta) purchases Instagram (for $1 billion in 2012) and WhatsApp ($19 billion in 2014);

Microsoft purchased Skype ($8.5 billion in 2011) and LinkedIn ($26.2 billion in 2016).

The acquisition of these assets strengthens the position of the big tech giants in the market making harder for outside rivals to compete with them.

Even in the highly global and integrated economy we have, just a handful of giant multinational corporations control much of what we buy, use and consume. For example, in the food and beverage industry just 10 companies control most of the production today. Unsurprisingly, these companies make hundreds of billions of dollars in revenue every year and this monopoly is arguably one of the hardest to break.³ The pharmaceutical industry is notably similar, dominated by a handful of big companies it stands unchallenged in its ability to dictate government health policy and its influence over Congress and the Food and Drug Administration (FDA) in the United States has been well documented.

Food and drink – Nestlé, PepsiCo, Coca-Cola, Unilever, Danone, General Mills, Kellogg's, Mars, Associated British Foods, and Mondelez.

Health and beauty – Proctor & Gamble, Unilever, Johnson & Johnson, GlaxoSmithKline.

Pharmaceuticals – Pfizer, Bayer, AstraZeneca, GlaxoSmithKline, Moderna, Roche, Johnson & Johnson.

In total, it is estimated that 12 companies own over 550 consumer brands (see below).

In news and media, 6 companies own virtually all the media output in the United States, these are: Disney, Comcast, Time Warner, Sony, National Amusements and News Corp.⁴ *

In banking and finance, the assets of the top 50 banks combined is around $89 trillion, more than the combined GDP of the U.S., China, Japan, India, Russia, UK and France.

The top four firms in the information services industry control 73% of the market, these are Apple, Microsoft, Nvidia, and Amazon. By market cap they are ranked as follows:

Apple - $3.14 trillion

Microsoft - $2.91 trillion

Nvidia - $2.7 trillion

Amazon - $2 trillion

Alphabet (Google’s parent company) - $1.9 trillion ⁵

‘The Big Four’

In accounting, consultancy and professional services, four firms dominate the landscape: KPMG, Deloitte, PwC (PricewaterhouseCoopers) and E&Y (Ernst and Young). Their market share of companies in the S&P 500 that they underwrite is a staggering 99.7%, ⁶ and they underwrite no less than 99% of the companies on the FTSE 100.⁷ By global revenue ‘the big four’ are ranked as follows:

Deloitte - $67.2 billion

PwC - $55.4 billion

E&Y - $51.2billion

KPMG - $38.4 billion ⁸

The technology company Nvidia is an interesting case study in how monopolies work in the modern, tech-dominated economy. Nvidia makes very advanced and highly technical components like GPUs (graphics processing units) and API (application programming interfaces), circuits, software and more. It’s H100 GPU sells for about $25,000 but it costs Nvidia an estimated $3,320 to make.⁹ Nvidia underscores the point that one of the reasons why monopolies are so common is that the advanced and highly technical products that these companies make are hard to replicate and therefore it is hard to compete with them in the marketplace.

Monopolies exist everywhere. Consider Britain’s National Health Service (the NHS). The NHS exerts near total monopolistic control over healthcare in the United Kingdom, and this market dominance allows it to set wages, benefits and working conditions, without any competition that either a free market or a more contestable market would invariably lead to. If there was a more open market in healthcare in the UK, then wages and benefits would improve and working conditions likely would as well, this would force the NHS to improve their service for its users (which is infamously poor) and increase wages for its workers.

Britain’s National Health Service

The legions of overseas workers that come to British shores to work in the NHS do not, strictly speaking, work for low wages; they work for the wages the NHS sets for them, which is near-minimum wage which the NHS can do because it has an ironclad, unchallenged grip over healthcare in Britain and these are the advantages that being a monopoly affords them. Though Britain has private healthcare providers, the NHS owns most of the hospitals, operating theatres, clinics and other health care centres, and private healthcare providers have to pay to use these facilities, this payment is invariably passed down to the customer and is one reason why private healthcare is so prohibitively expensive in the UK.

Many people feel that monopolies are just the natural state of successful business and are impossible to avoid as such. Additionally, there is a widely held belief that the FTC (Federal Trade Committee) in the United States has not done a particularly good job of regulating monopolies and their practices.

1. Pettinger, T. (2020) Types of market structure. https://www.economicshelp.org/microessays/markets/.

2. Shaxson, N. (2018) The finance curse: How global finance is making us all poorer. Random House., p.21

3. Taylor, K. (2017) 'These 10 companies control everything you buy | The Independent,' The Independent, 31 May. https://www.independent.co.uk/extras/these-10-companies-control-everything-you-buy-a7765461.html.

4. WebFX (no date) The 6 companies that own (almost) all media at https://www.webfx.com/blog/internet/the-6-companies-that-own-almost-all-media-infographic/

* Whilst not a monopoly in the strictest sense of the word it is still a significant concentration of power.

5. Companies ranked by Market Cap - CompaniesMarketCap.com (no date). https://companiesmarketcap.com/usd/.

6. Lu, M. (2024) Big Four Market Share by S&P 500 Audits https://www.visualcapitalist.com/big-four-audit-fees-market-share-s-p-500/

7. 2024 public company audit market share report findings (no date). https://www.ideagen.com/thought-leadership/blog/who-audits-public-companies-2024-edition.

8. Statista (2025) Revenue of the Big Four accounting/audit firms worldwide in 2024. https://www.statista.com/statistics/250479/big-four-accounting-firms-global-revenue/.

9. Cloud, C. (no date) How much does the NVIDIA H100 GPU cost in 2025? https://cyfuture.cloud/kb/gpu/how-much-does-the-nvidia-h100-gpu-cost-in-2025#:~:text=Manufacturing%20&%20Margins:%20Reports%20suggest%20that,GPU%20clusters%2C%20driving%20up%20prices.