Legal monopoly

A legal monopoly exists when a provider is protected from competition by government regulation. Part, the term legal monopoly is also used for markets in which the State acts as the sole provider ( state monopolies ).

Types of legal monopolies

Temporary and perpetual monopolies

Legal monopolies are granted a limited period - for example through patents or licenses - or indefinitely apply. The latter is ( as opposed to based on official administrative records ) usually with legal monopolies the case. For example, no intercity buses since 1931 will only be established when the transport needs with existing transport can not be operated ( § 13 Section 2 Subsection 2, lit. A) and b ) of the Passenger Transportation Act ).

Legal monopolies in the narrow and in a broad sense

Legal monopolies can protect a provider alone against all competitors. For example, municipal service concessions are awarded to a private party who is acting as a monopolist for waste disposal or the power supply then. Another example was the TÜV before the liberalization of Prüfmarktes.

If one understands monopolies in a broader sense, namely, so that they do not assign a provider but a group of providers an economic privilege, there are numerous other legal monopolies. These include in particular all restrictions on admission to professions and activities.

• For example, healing services may only offer in many states, who is licensed as a physician or medical practitioner.

• Prior to the adoption of the so-called pharmacies judgment of the Federal Constitutional Court approval to open a pharmacy from officially identified needs was made ​​dependent in many German states.

• In Germany no one is allowed to offer legal advice to have completed without the legal state and to be admitted to the bar (which was fully under the Legal Advice Act, under the Legal Services Act is limited to legal advice as the main power).

• The sweeping monopoly prohibits third parties to offer sweeping services.

Legal monopolies and economic theory

In support of legal monopolies is often claimed that it was stated that the monopolized sectors natural monopolies; State intervention was only in response to an existing market failure. Example: The prohibition of intercity buses that will provide routes with existing rail link is justified, the railway network constitutes a natural monopoly; a competition from buses was therefore " not economically viable ".

However, according to many economists the monopoly arises only through state intervention.

It has also in all cases of cancellation of the competition protection actually developed in the wake competition, which the view is in some ways, the legal monopolies were only response to natural monopolies.

In contrast to the natural monopoly whose benefit and harm for overall societal welfare is controversial, there is no doubt that legal monopolies affect the overall social prosperity, at least in the form of unlimited time.

Therefore also non-economic reasons to justify usually called, for example, the public health or the protection against incorrect legal advice.