A monopoly exists in a market when there is only one supplier. There is no competition in a monopolistic market.

In a monopoly, the barriers to entry are exceptionally high; in some monopolies, the barriers to entry are created by government legislation, so it is impossible for another firm to enter the market. In a monopoly, the good or service provided has no close substitutes.

If I had written this section ten years ago, I would have said the government has created a number of natural monopolies so that a range of goods and services could be provided to all Australians at the lowest poassible cost. It was argued that in some markets, for price to be kept as low as possible, production had to be as high as possible to take advantage of ''economies of scale''. It would be inefficient to have half a dozen small power plants, because of the high levels of fixed costs associated with building such a plant. It would be better to have one large plant, where the level of production was as high as possible, so that the fixed costs per unit of unit were as low as could be achieved. Today however, both Labor and Liberal governments have been selling state owned companies, either fully or partially, to create competition in the market place. Today, the national electricity grid has power supplied by both publicly owned and privately owned companies; telecommunications are provided by many companies, not just Telstra.