The Meaning of Monopoly

The De Beers monopoly of South Africa was created in the 1880s by Cecil Rhodes, a British businessman. By 1880 mines in South Africa already dominated the world’s supply of diamonds. There were, however, many mining companies, all competing with each other. During the 1880s Rhodes bought the great majority of those mines and consolidated them into a single company, De Beers. By 1889 De Beers controlled almost all of the world’s diamond production.

A monopolist is a firm that is the only producer of a good that has no close substitutes. An industry controlled by a monopolist is known as a monopoly.

De Beers, in other words, became a monopolist. A producer is a monopolist if it is the sole supplier of a good that has no close substitutes. When a firm is a monopolist, the industry is a monopoly.