Foundations and Criteria for Distinguishing Legitimate from Illegitimate Monopoly

Document Type : Research Paper

Authors

1 . PhD student in private law, Faculty of Law and Political Science, Shiraz University, Shiraz, Iran

2 Associate Professor, Department of Private and Islamic Law, Faculty of Law and Political Science, Shiraz University, Shiraz, Iran

Abstract

Introduction
Monopoly occurs when there is only one or a few producers or sellers of a good or service. Monopoly in the trade of goods leads to the possibility of controlling the market for similar goods, which results in potential negative consequences such as price increases, economic stagnation, weakening of consumer rights, and so on. Therefore, the regulatory duty of economic regulations forces the government to combat it. However, some businesses are monopolized by the government or individuals, including legally protected persons, and are considered legitimate monopolies. But a number of monopolies, although anti-competitive due to various reasons and factors, are supportable because of their positive effects on economic growth, development of investment, increase in infrastructure, promotion of research and development, technology, and public welfare. Since laws and regulations do not draw a precise boundary between these two types of monopoly, this research, by presenting distinguishing foundations, seeks to 




Foundations and Criteria for Distinguishing Legitimate …




identify and justify the criteria that differentiate these two types of monopoly.
 
Method
 The method of this research is descriptive-analytical, and the data collection tool is library resources and the use of data available in databases, especially legal databases.
 
Findings
 Examination of the subject shows that a distinction must be made between the foundations and the criteria that distinguish legitimate from illegitimate monopoly. There are foundations, principles, and rules that justify and even necessitate the distinction between legitimate and illegitimate monopoly, the most important of which are public order, consumer rights, and preventing harm to others. The criteria, which are established based on the identified and presented foundations, act as indicators for determining the type of monopoly and can be divided into legal, economic, and political types. Criteria such as the possibility of product substitution, market share calculation, and significant price increase prove the existence of a hypothetical monopolist from an economic perspective. In the next stage, legal science intervenes with criteria such as originality of the idea or effort, good faith, reasonableness of adopting certain supra-competitive methods, and fundamental evaluation to distinguish between legitimate monopoly and monopolies created by resorting to unfair and inequitable means, so that legitimate commercial efforts that lead to economic development are not wasted. The political criterion is the attitude of governments, which is rooted in their political thought, mainly situated between the two poles of communism and the concept of distributive justice, and liberalism and the concept of commutative justice.
 
Conclusion
 The positive and negative consequences of monopoly are two sides of the same coin. Some believe that monopoly causes economic growth, increased production, lower prices, etc., while others believe that monopoly produces these same effects in a negative direction. Monopoly power created through effort, innovation, and commercial luck without seriously violating the rights of others should be protected by law because it enables merchants and commercial companies to increase investment, develop infrastructure, increase employment and production, and advance technical knowledge and technology. Therefore, the benefits of legitimate monopoly outweigh those of illegitimate monopoly, such as the possibility of abusing monopoly power. Consequently, with a regulatory tool that prevents the use of monopoly in a negative and destructive direction, it is possible to ensure the preservation of the positive effects of monopoly and encourage individuals to invest. Finally, given the positive effects of legitimate monopoly on economic growth, development of investment, increase in infrastructure, promotion of research, growth and technology, and public welfare, the theory of facilitating and supporting legitimate monopoly should be seriously considered.

Keywords

Main Subjects


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