Diamonds last forever, and one lasts forever. Classic advertising words show the dignity and elegance of diamonds. Diamonds have always been a symbol of luxury. When asked why, most people will answer: because there are few diamonds, things are rare, and things are rare. But is this really the case? If you ask a geologist, he will tell you that diamonds are not rare. Actually, in the way of excellent treasures and jewels? According to Jones Owen's guide, diamonds are more common than other colored stones with gem texture. They just look rarer. Why do we think diamonds are rarer than other precious stones? Part of the reason lies in the excellent marketing activities of diamond manufacturers, which constantly instill information about the rarity of diamonds into you, and you will feel that diamonds are rare before you know it. In fact, you think the main reason for the scarcity of diamonds is De Beers, a diamond mining company, which controls most of the diamond veins in the world and limits the number of diamonds available in the market for a certain period of time, leading to its monopoly of global diamond production. De Beers in South Africa is monopolized by British businessman Cecil? Rhodes was founded in the 1980s in 19. At that time, the diamonds in the world were mainly supplied by mines in South Africa. However, there are many competing mining companies. In the 1980s, Rhodes bought most of these mines and merged them into one company, De Beers. By 1989, De Beers controlled almost all diamond production in the world. Monopolists are the only (or almost the only) commodity producers without similar substitutes. When an enterprise is a monopolist, its industry is a monopoly industry. For example, De Beers is a monopolist. Perfect competition and monopoly are both special types of market structure. They are two special types in the market system. Perfect competitors sell their products at a given price, while monopolists behave differently. Monopolists know that their actions affect the market price and consider this influence when deciding the output. By reducing the supply, the monopolist makes the price higher than the price in the state of perfect competition, thus obtaining high profits. Cecil? Rhodes merged diamond producers into De Beers because he realized that the overall value was higher than the sum of the parts, and the profits generated by monopoly would be higher than the sum of the profits of individual competitors. The ability of monopolists to make prices higher than the competitive level by reducing production is called market power, which is related to monopoly. Any farmer who produces wheat has no market power. He or she must sell wheat at the current market price. But your cable company has market power. It can raise the price, but it can still retain many (though not all) customers because you have no choice. The local cable company has no semicolon. In other words, it is also a monopolist. Monopolists can maintain their monopoly position continuously because other enterprises can't enter their industries, but something prevents other enterprises from entering. This kind of thing is called entry barriers. In the market economy, there are four main barriers to entry: the control of scarce resources or input factors, economies of scale, technological advantages and barriers made by the government. Explain in detail below: 1. Control of scarce resources or input factors Once the monopolist controls the vital resources or input factors in an industry, it can prevent other enterprises from entering this market. Cecil? It is by controlling most of the diamond mines in the world that Rhodes created De Beers' monopoly on the diamond production industry. 2. Economies of scale actually existed in the natural gas supply industry at the beginning of19th century, but the competition did not last long. Soon, due to the high fixed cost of laying pipelines for cities, the natural gas supply in almost every city was monopolized. Because the cost of laying natural gas pipeline is not determined by the quantity of natural gas sold by the company, the company with large sales volume has a cost advantage: because it can share the fixed cost in a wider range, its average total cost is lower than that of small companies, which has economies of scale. In an industry with economies of scale, large companies will get more profits, while small companies will be expelled from the industry. For the same reason, the established company has a cost advantage over any potential entrant, which is a potential entry barrier. Therefore, the monopoly of local natural gas companies is triggered and maintained by the economies of scale in their own industries. This kind of monopoly triggered and maintained by economies of scale is called natural monopoly. Natural monopoly is defined as the existence of economies of scale within a certain output range. Its condition is that a large number of fixed costs should be put into the industry, and the average total cost of a large enterprise to produce a certain number of products is lower than that of two or more small enterprises. Natural monopolies abound in local public utilities, such as tap water, natural gas, electricity, local telecommunications services and cable TV. 3. Technological Advantage A company that always maintains its technological advantage over potential competitors in the industry is likely to become a monopolist. From 1970s to 1990s, Intel has always maintained its advantages in the design and production of CPU, and has always been in a monopoly position in CPU production. But technological advantages are generally short-term rather than long-term barriers to entry: over time, competitors will invest money to improve their technology and compete with technology leaders. In fact, in recent years, Intel found that its technological superiority was threatened by AMD, a competitor of American advanced microelectronic device company, and its monopoly pattern was gradually broken. It is worth noting that in some high-tech industries, technological advantage is not a guarantee to surpass competitors. Some high-tech industries have the characteristics of network externalities, that is, the value of products to consumers increases with the increase of the number of people using products. Among these industries, the enterprise with the largest network and the largest number of consumers currently using its products has an advantage over its competitors in attracting new customers, which may make it a monopolist. Microsoft is often regarded as an example of this. The company's Windows operating system is not as good as Apple's operating system in technology, but because the consumers of Windows are much bigger than Apple, Microsoft naturally becomes the monopolist of the operating system. Barriers made by the government The most important legal monopoly barriers made by the government are patents and copyrights. The patent right is now valid for 20 years and is given to the inventor of the new product; Copyright is for authors and editors, usually valid for the creator's life plus 70 years. The starting point for the government to create legal monopoly is very simple, that is, to ensure the profits of monopoly enterprises, so as to achieve the purpose of encouraging innovation. An enterprise is willing to invest a lot of money in the research and development of new products. On the one hand, it is expected to bring industry monopoly and make huge profits. Innovation is the source of social progress. In order to encourage innovation, the government sets up barriers, so that innovative enterprises can gain a monopoly position in a certain industry within a certain period of time and ensure that their innovation can get high returns, thus stimulating enterprises to innovate continuously and promoting social progress. The crowning touch of economics: monopoly is a controversial topic. In order to get the maximum profit, producers always want to be the largest and monopoly industry in the industry, but consumers also know the inconvenience caused by monopoly. On the one hand, monopolizing centralized resources improves efficiency; On the other hand, monopoly excludes competition, resulting in inefficiency. In a word, monopoly is a balanced game process between producers and consumers.