Monopolies are the antithesis of perfect competition because the monopolist has power to set high prices, reduce the quantity produced, and be slow to innovate. The resulting artificial equilibrium provides excessively high monopoly profits to the monopolist and a suboptimally low level of products for consumers. The burden of this dead-weight loss transfers wealth from society to the monopolist. Numerous regulatory policies have been introduced to limit monopoly power and force the market back towards the benefits of more perfect competition. The U.S. antitrust laws and the antimonopoly laws in the EC and many other nations are intended to correct for the market failure that permits monopolies to form.
Trade barriers erect monopolistic barriers to entering foreign markets.
They tend to preserve market power for each nations' domestic producers at the expense of more perfect competition. A form of monopolization occurs when one or a few sellers of scarce commodities can supply far less than the market demands. While this would seem to be the essence of careful business forecasting that the market model rewards, there can be political pressures to regulate and tax them. Windfall profits have occasionally been viewed as a form of monopoly power if no particular skill or ingenuity was involved and the windfall profits are very large. Windfall profit taxes transfer the undue windfall from producers to consumers.