Editing State monopoly (section)

== Market power ==
A state monopoly's market power and dominance can arise from its superior [[Innovation|innovative]] capacity or greater performance.<ref>{{Cite journal |last=Zhao |first=Bo |date=May 2012 |title=Monopoly, economic efficiency and unemployment |url=https://linkinghub.elsevier.com/retrieve/pii/S0264999312000065 |journal=Economic Modelling |language=en |volume=29 |issue=3 |pages=586–600 |doi=10.1016/j.econmod.2012.01.001|s2cid=154754431 |url-access=subscription }}</ref> However, any of the three following factors more broadly explain a state monopoly's existence:

* A natural monopoly endures within the market, whereby the most efficient form of meeting demand is through the creation of a [[State-owned enterprise|single government entity]].<ref name=":0">{{Cite book |last=W. |first=Sharkey, William |url=http://worldcat.org/oclc/1127513607 |title=The Theory of Natural Monopoly |date=1982 |publisher=Cambridge University Press |isbn=978-0-511-57181-7 |oclc=1127513607}}</ref>
* The state monopoly is legislated for, with legislative instruments precluding competitive activities regarding the provision of goods or services.<ref name=":0" />
* A poorly contestable market exists, with competition previously operating inefficiently despite the lack of legal restrictions.<ref name=":0" /><ref>{{Cite journal |last1=Davis |first1=Colin |last2=Hashimoto |first2=Ken-ichi |date=February 2016 |title=Economic Integration, Monopoly Power and Productivity Growth without Scale Effects: Economic Integration and Productivity Growth |url=https://onlinelibrary.wiley.com/doi/10.1111/rode.12200 |journal=Review of Development Economics |language=en |volume=20 |issue=1 |pages=152–163 |doi=10.1111/rode.12200|s2cid=59503533 |hdl=10.1111/rode.12200 |hdl-access=free }}</ref>

=== Evidence of exercising market power ===
The primary determinations of demonstrating the market power of state monopolies are:

* The monopoly's [[economic income]] within the market is characterized by disproportionate returns on its existing [[Asset|asset base]].<ref name=":1">{{Cite journal |last1=von Blanckenburg |first1=Korbinian |last2=Neubert |first2=Milena |date=2015-04-19 |title=Monopoly Profit Maximization: Success and Economic Principles |journal=Economics Research International |language=en |volume=2015 |pages=1–10 |doi=10.1155/2015/875301 |issn=2090-2123|doi-access=free }}</ref> This income would be excessive, if it were not a result of its inefficient operations.<ref name=":1" /><ref name=":2">{{Cite journal |last=Toole |first=Andrew A. |date=September 2010 |title=G. G. Djolov, The Economics of Competition: The Race to Monopoly. London: The Haworth Press, 2006, 322 pp., ISBN 0789027895 (SC), $47.50. |url=http://dx.doi.org/10.1002/agr.20232 |journal=Agribusiness |volume=26 |issue=1 |pages=174–175 |doi=10.1002/agr.20232 |issn=0742-4477|url-access=subscription }}</ref>
* There is a substantial difference between best practice benchmarks within private organisations, and the state monopoly's own productive efficiency.<ref name=":3">{{Cite journal |last=Brown |first=John Howard |date=June 2009 |title=Henry W. de Jong and William G. Shepherd, eds., Pioneers of Industrial Organization: How the Economics of Competition and Monopoly Took Shape (Cheltenham, UK: Edward Elgar, 2007). |url=http://dx.doi.org/10.1017/s1053837209090245 |journal=Journal of the History of Economic Thought |volume=31 |issue=2 |pages=243–244 |doi=10.1017/s1053837209090245 |s2cid=154765535 |issn=1053-8372|url-access=subscription }}</ref> For example, a monopoly's lack of productive efficiency could be resultant of [[Gold plating (project management)|gold plating of assets]].<ref name=":4">{{Cite journal |date=February 1949 |title=Eyring, Carl F. Essentials of physics. New York: Prentice-Hall, Inc. 1948. 422 p. $3.75 |url=http://dx.doi.org/10.1002/sce.3730330167 |journal=Science Education |volume=33 |issue=1 |pages=85–86 |doi=10.1002/sce.3730330167 |bibcode=1949SciEd..33S..85. |issn=0036-8326|url-access=subscription }}</ref>
* The monopoly [[Cross subsidization|cross-subsidies]] incomes between loss-making activities and profitable activities.<ref name=":3" /> If the aforementioned occurs through production or pricing behaviors, this suggests usual competitive forces characteristic of competitive markets are not being applied to the state monopoly.<ref name=":2" /> A firm engaging in this practice under normal market conditions, would not survive in the [[Long run and short run|long run]].<ref name=":4" /><ref name=":2" />