In economics, a government monopoly or public monopoly is a form of coercive monopoly in which a government agency or government corporation is the sole provider of a particular good or service and competition is prohibited by law. It is a monopoly created by the government. It is usually distinguished from a government-granted monopoly, where the government grants a monopoly to a private individual or company.
A government monopoly may be run by any level of government -- national, regional, local; for levels below the national, it is a local monopoly. The term state monopoly usually means a government monopoly run by the national government.
The most prominent example of the monopoly is law and the legitimate use of physical force. In many countries, the postal system is run by the government with competition forbidden by law in some or all services. Also, government monopolies on public utilities, telecommunications and railroads have historically been common, though recent decades have seen a strong privatization trend throughout the industrialized world.
In Nordic countries, some goods deemed harmful are distributed through a government monopoly. For example, in Finland, Iceland, Norway and Sweden, government-owned companies have monopolies for selling alcoholic beverages. Casinos and other institutions for gambling might also be monopolized. In Finland, the government has a monopoly to operate slot machines (see Veikkaus).
Governments often create or allow monopolies to exist and grant them patents. This limits entry and allow the patent-holding firm to earn a monopoly profit from an invention.