Classroom Companion: Business

Market type
Number of 
sellers
Number of 
buyers
Barriers to 
entry
Examples in digital 
economy
Monopoly
One
Many
Impossible
Facebook
Oligopoly
Few
Many
High
Mobile network 
operators (MNO)
Monopolistic 
competition
Many
Many
Open
Smartphones 
manufacturers
Perfect competi-
tion
Many
Many
Open
Digital freelance 
services
Oligopsony
Many
Few
High
Spotify
Monopsony
Many
One
Impossible
YouTube
13.1 · Definition of Market Types

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13.2 
 Formation of Monopolies
Until 1998, the telecommunications businesses in most countries were government- 
granted monopolies (or de jure monopolies). Full competition was introduced in 
Europe in 1998, allowing anyone to become a network or service provider (ISP). To 
prevent the incumbent (the former monopolist) from misusing its market power 
built up on historical government money, the fairness of competition was strictly 
regulated by the government. The regulations impede the incumbent from buying up 
competitors or forcing them out of the market with unfair pricing or other obstruc-
tions of their business. The regulations contain technical and commercial conditions 
for how newcomers can interconnect their networks to the network of the incum-
bent, also allowing the newcomers to operate as resellers or virtual network opera-
tors (VNOs). Despite the regulations, monopolies have arisen in the ICT businesses, 
especially in information service markets. These newcomers (e.g., Facebook, 
YouTube, and Twitter) are referred to as natural monopolies or de facto monopolies.
One
Many
One
Many