Market interactions are typically distorted due to the market power that monopolies have. Goods produced are fewer and prices are raised in order to achieve greater margins, using a market skimming approach. Where government
does not sponsor a monopoly, they may form out of mergers or even naturally out of innovation. Legal provisions aim
at certain behaviors when a company is in a dominant position, but not on being in a dominant position itself.
The role of a government monopoly is that of inducing creativity by granting companies rights to the fruits of their innovation. Other reasons why governments sanction this structure is to foster investments in a risky venture or sustaining a domestic interest group.
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