economy, one historical example of this pattern occurred when ALCOA—the Aluminum Company of

America—controlled most of the supply of bauxite, a key mineral used in making aluminum. Back in the

1930s, when ALCOA controlled most of the bauxite, other firms were simply unable to produce enough

aluminum to compete.

As another example, the majority of global diamond production is controlled by DeBeers, a multi-national

company that has mining and production operations in South Africa, Botswana, Namibia, and Canada. It also

has exploration activities on four continents, while directing a worldwide distribution network of rough cut

diamonds. Although in recent years they have experienced growing competition, their impact on the rough

Access for free at openstax.org
9.1 • How Monopolies Form: Barriers to Entry 219

diamond market is still considerable.

Legal Monopoly

For some products, the government erects barriers to entry by prohibiting or limiting competition. Under U.S.
{"file_name": "Microeconomics3e.pdf", "moddate": "2022-12-07T14:23:05-06:00", "producer": "Prince 14.2 (www.princexml.com)", "creator": "PDFMiner", "file_size_mb": 26.99, "source": "downloads\\business\\economics\\Microeconomics3e.pdf", "creationdate": "2022-12-07T14:15:44-06:00", "file_hash": "830b81f41611ac67a490444dbb5d6aed292224606965b06965b914443c93331a", "upload_timestamp": "2026-02-07T15:24:38.309401", "batch_upload": true, "uploaded_via": "batch_uploader", "file_type": ".pdf", "total_pages": 597, "source_file": "downloads\\business\\economics\\Microeconomics3e.pdf", "title": "Principles of Microeconomics 3e"}