Answer
An example of a government-created monopoly is the postal service, which is entirely government owned in the US and Australia. Other examples include utilities such as telecommunications, water and electricity.
A government-created monopoly is not necessarily bad policymaking, because some services must be provided to everyone independently of individuals' ability to pay or market forces. The government may also create a monopoly to prevent a private firm from engaging in profit maximisation at the expense of public welfare.
Work Step by Step
Students can refer to page 319 of the text, which discusses government policy toward monopolies. Public ownership of monopolies often takes the form of running a natural monopoly.
