In
economics and
business ethics, a
coercive monopoly is a business concern that is operating in an environment where competitors are being prevented from entering the field, such that the firm is able to raise prices, and make production decisions, without risk of competition arising to draw away their customers. A coercive monopoly is not merely a sole supplier of a particular kind of good or service (a
monopoly), but it is a monopoly where there is no opportunity to compete through means such as price competition, technological or product innovation, or marketing; entry into the field is closed. As a coercive monopoly is securely shielded from possibility of competition, it is able to make pricing and production decisions with the assurance that no competition will arise. It is a case of a
non-contestable market. A coercive monopoly has very few incentives to keep prices low and may deliberately
price gouge consumers by curtailing production. Also, according to economist
Murray Rothbard, "a coercive monopolist will tend to perform his service badly and inefficiently."