Monopoly (game)
| The Fast-Dealing Property Trading Game | |
|---|---|
 The Monopoly logo (2008–present) | |
| Designers | Lizzie Magie, Charles Darrow |
| Publishers |
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| Publication | 1935 |
| Genres | Board game |
| Players | Minimum of 2, maximum of however many tokens are provided in the box. |
| Setup time | 2–5 minutes |
| Playing time | 20–180 minutes |
| Random chance | High (dice rolling, card drawing) |
| Age range | 8+ |
| Skills required |
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Monopoly is a multi-player economics-themed board game. In the game, players roll two dice to move around the game board, buying and trading properties, and developing them with houses and hotels. Players collect rent from their opponents, with the goal being to drive them into bankruptcy. Money can also be gained or lost through Chance and Community Chest cards, and tax squares. Players receive a stipend every time they pass "Go", and can end up in jail, from which they cannot move until they have met one of three conditions. The game has numerous house rules, and hundreds of different editions exist, as well as many spin-offs and related media. Monopoly has become a part of international popular culture, having been licensed locally in more than 103 countries and printed in more than 37 languages.
Monopoly is derived from The Landlord's Game created by Lizzie Magie in the United States in 1903 as a way to demonstrate that an economy that rewards wealth creation is better than one where monopolists work under few constraints, and to promote the economic theories of Henry George—in particular his ideas about taxation. The Landlord's Game had two sets of rules originally, one with taxation and another one mainly based on current rules. When Monopoly was first published by Parker Brothers in 1935, it did not include the less capitalistic taxation rule, which resulted in a more competitive game. Parker Brothers was eventually absorbed into Hasbro in 1991. The game is named after the economic concept of monopoly—the domination of a market by a single entity.
What Is a Monopoly?
A monopoly is a dominant position of an industry or a sector by one company, to the point of excluding all other viable competitors.
Monopolies are often discouraged in free-market nations. They are seen as leading to price-gouging and deteriorating quality due to the lack of alternative choices for consumers. They also can concentrate wealth, power, and influence in the hands of one or a few individuals.
On the other hand, monopolies of some essential services such as utilities may be encouraged and even enforced by governments.
KEY TAKEAWAYS
- A monopoly consists of a single company that dominates an industry.
- A monopoly can develop naturally or be government-sanctioned for particular reasons.
- However, a company can gain or maintain a monopoly position through unfair practices that stifle competition and deny consumers a choice.
Understanding a Monopoly
A monopoly is characterized by the absence of competition, which can lead to high costs for consumers, inferior products and services, and corrupt business practices.
Types of Monopolies
Monopolies typically have an unfair advantage over their competition because they are either the only provider of a product or control most of the market for their product. Although monopolies might differ from industry to industry, they tend to share similar characteristics:
- High barriers of entry: Competitors are unable to break into the market due to a single company's control of it.
- Single seller: There is only one seller available in the market.
- Price maker: The company that operates the monopoly can determine the price of its product without the risk of a competitor undercutting its price. A monopoly can raise prices at will.
- Economies of scale: A monopoly can buy huge quantities of the raw materials it needs at a volume discount. It can then lower its prices so much that smaller competitors can't survive.
The Pure Monopoly
A company with a "pure" monopoly is the only seller in a market with no other close substitutes. For many years, Microsoft Corporation had a virtual monopoly on personal computer operating systems. As of July 2021, its desktop Windows software still had a market share of about 73%,1 down from about 97% in 2006.
Any pure monopoly (as opposed to an oligopoly, for example), enjoys a business that has high barriers to entry, such as significant startup costs that prevent competitors from entering the market.
Monopolistic Competition
When there are multiple sellers in an industry with many similar substitutes for the goods produced and companies retain some power in the market, it's referred to as monopolistic competition. In this scenario, an industry has many businesses that offer similar products or services, but their offerings are not perfect substitutes. In some cases, this can lead to duopolies.
Visa and MasterCard might be an example of a duopoly. They dominate their industry but neither can stifle the other.
In a monopolistic competitive industry, barriers to entry and exit are typically low, and a multitude of companies try to differentiate themselves through price cuts and marketing efforts. However, because the products offered by various competitors are so similar, it's difficult for consumers to tell which product is better. Some examples of monopolistic competition include retail stores, restaurants, and hair salons.
The Natural Monopoly
A natural monopoly can develop. A sector that has high fixed or startup costs, depends on unique raw materials or technology, or is highly specialized, can produce a monopoly.
Companies that have patents on their products that prevent competitors from producing the same product can have a natural monopoly. Pharmaceutical companies depend on patents to recoup the high costs of innovation and research.
The Government-Sanctioned Monopoly
Public monopolies may be set up by governments to provide essential services and goods. The U.S. Postal Service was established as one, although it has lost much of its exclusivity with the emergence of private carriers such as United Parcel Service and FedEx.
In the utilities industry in the U.S., natural or government-allowed monopolies flourish. Usually, there is only one major company supplying energy or water in a region or municipality. The monopoly is allowed because these suppliers incur substantial costs in producing and delivering power or water, and a sole provider is considered to be more efficient and reliable.
The tradeoff is that the government heavily regulates and monitors these companies. Regulations can control the rates that utilities charge and the timing of any rate increases.
Antitrust Laws
Antitrust laws and regulations are put in place to discourage monopolistic operations—protecting consumers, prohibiting practices that restrain trade, and ensuring an open market.
In 1890, the Sherman Antitrust Act became the first legislation passed by the U.S. Congress to limit monopolies. The act had strong support in Congress, passing the Senate with a vote of 51–1 and passing the House of Representatives unanimously with a vote of 242–0.
In 1914, two additional pieces of antitrust legislation were passed to help protect consumers and prevent monopolies. The Clayton Antitrust Act created new rules for mergers and corporate directors and listed specific examples of practices that would violate the Sherman Antitrust Act. The Federal Trade Commission Act created the Federal Trade Commission (FTC), which sets standards for business practices and enforces the two antitrust acts, along with the Antitrust Division of the U.S. Department of Justice.
The laws are intended to preserve competition and allow smaller companies to enter a market rather than merely suppress strong companies.
Breaking Up Monopolies
The Sherman Antitrust Act has broken up large companies over the years, including Standard Oil Company and the American Tobacco Company.
The Microsoft Case
In 1994, the U.S. government accused Microsoft of using its significant market share in the personal computer operating systems business to prevent competition and maintain a monopoly. The complaint, filed on July 15, 1994, stated:
The United States of America, acting under the direction of the Attorney General of the United States, brings this civil action to prevent and restrain the defendant Microsoft Corporation from using exclusionary and anticompetitive contracts to market its personal computer operating system software. By these contracts, Microsoft has unlawfully maintained its monopoly of personal computer operating systems and has an unreasonably restrained trade.7
A federal district judge ruled in 1998 that Microsoft was to be broken into two technology companies, but the decision was later reversed on appeal by a higher court. The controversial outcome was that, despite a few changes, Microsoft was free to maintain its operating system, application development, and marketing methods.
The AT&T Breakup
The most consequential monopoly breakup in U.S. history was that of AT&T. After being allowed to control the nation's telephone service for decades as a government-supported monopoly, the giant telecommunications company found itself challenged under antitrust laws.
In 1982, after an eight-year court battle, AT&T was forced to divest itself of 22 local exchange service companies. It was forced to sell off additional assets or split off units several times afterward.9
What Are Some Characteristics of Monopolies?
One key characteristic of a monopoly is a high barrier to competition. Until 1982, AT&T had telephone lines that reached nearly into every home and business in the U.S. Who could have duplicated that? The answer was a forced spinoff of the Baby Bells.
A definitive characteristic of the monopoly is its ability to set prices and, in the absence of competitors, to raise them at will.
Also, monopolies can be money machines. They are the sole buyer of the products they need or at the very least the largest buyer. They are able to negotiate the prices they pay their suppliers while charging their customers whatever the market can bear.
What Is a Natural Monopoly?
A natural monopoly may exist without practicing any unfair machinations to stifle competition.
A company can be the only provider of a product or service in a region or an industry because no other company can match its past investment, its technology, or the talent it employs.
The term natural monopoly also is used for a company that has been sanctioned by a government to act as a monopoly because competition is deemed impractical, bad for the public, or both. Most public utilities in the U.S. operate as monopolies.
Why Are Monopolies Unfair?
A company that dominates a business sector or industry can use that dominant position to its own advantage and to the disadvantage of its customers, its suppliers, and even its employees. None of these constituencies have any alternative but to accept the status quo.
Notably, the Sherman Antitrust Act does not outlaw monopolies. It outlaws the restraint of interstate commerce or competition in order to create or perpetuate a monopoly.4
What Antitrust Laws Exist to Break Up Monopolies?
In 1890, the Sherman Antitrust Act became the first U.S. law to limit monopolies.
History
Early history
The history of Monopoly can be traced back to 1903, when American antimonopolist Lizzie Magie created a game which she hoped would explain the single-tax theory of Henry George. It was intended as an educational tool to illustrate the negative aspects of concentrating land in private monopolies. She took out a patent in 1904. Her game, The Landlord's Game, was self-published, beginning in 1906.
Magie created two sets of rules: an anti-monopolist set in which all were rewarded when wealth was created, and a monopolist set in which the goal was to create monopolies and crush opponents.
Several variant board games, based on her concept, were developed from 1906 through the 1930s; they involved both the process of buying land for its development and the sale of any undeveloped property. Cardboard houses were added and rents increased as they were added to a property. Magie patented the game again in 1923.
According to an advertisement placed in The Christian Science Monitor, Charles Todd of Philadelphia recalled the day in 1932 when his childhood friend, Esther Jones, and her husband Charles Darrow came to their house for dinner. After the meal, the Todds introduced Darrow to The Landlord's Game, which they then played several times. The game was entirely new to Darrow, and he asked the Todds for a written set of the rules. After that night, Darrow went on to utilize this and distribute the game himself as Monopoly.
Parker Brothers bought the game's copyrights from Darrow. When the company learned Darrow was not the sole inventor of the game, it bought the rights to Magie's patent for $500.
Parker Brothers began marketing the game on November 5, 1935. Cartoonist F. O. Alexander contributed the design.U. S. patent number US 2026082 A was issued to Charles Darrow on December 31, 1935, for the game board design and was assigned to Parker Brothers Inc. The original version of the game in this format was based on the streets of Atlantic City, New Jersey.
1936–1970
In 1936, Parker Brothers began licensing the game for sale outside the United States. In 1941, the British Secret Intelligence Service had John Waddington Ltd., the licensed manufacturer of the game in the United Kingdom, create a special edition for World War II prisoners of war held by the Nazis.[13] Hidden inside these games were maps, compasses, real money, and other objects useful for escaping. They were distributed to prisoners by fake charity organizations created by the British Secret Service.
In the Nazi-occupied Netherlands, the German government and its collaborators were displeased with Dutch people using Monopoly Game sets with American or British locales, and developed a version with Dutch locations. Since that version had in itself no specific pro-Nazi elements, it continued in use after the war, and formed the base for Monopoly games used in the Netherlands up to the present.
1970s–1980s
Economics professor Ralph Anspach published Anti-Monopoly in 1973, and was sued for trademark infringement by Parker Brothers in 1974. The case went to trial in 1976. Anspach won on appeals in 1979, as the 9th Circuit Court determined that the trademark Monopoly was generic and therefore unenforceable. The United States Supreme Court declined to hear the case, allowing the appellate court ruling to stand. This decision was overturned by the passage of Public Law 98–620 in 1984. With that law in place, Parker Brothers and its parent company, Hasbro, continue to hold valid trademarks for the game Monopoly. However, Anti-Monopoly was exempted from the law and Anspach later reached a settlement with Hasbro and markets his game under license from them.
The research that Anspach conducted during the course of the litigation was what helped bring the game's history before Charles Darrow into the spotlight.