<!-- generated: provider=openrouter model=arcee-ai/trinity-large-preview:free date=2026-02-19 source=book-4-chapter-06 -->

# Monopoly in Trade

## Definition

A market condition where a single nation or group of merchants has exclusive control over the trade of certain goods, allowing them to sell at higher prices and purchase at lower prices than would occur under free competition. This artificial market power distorts natural price mechanisms and reduces overall economic efficiency.

## Source Chapter

Book IV, Chapter 6

## Context

Smith identifies monopoly as the central economic mechanism through which treaties of commerce operate. When a country grants trade privileges to another nation, it effectively creates a monopoly for that nation's merchants in the favoured market. This monopoly power allows them to extract higher profits at the expense of both consumers in the favoured country and producers in the favouring country.

## Economic Domain

Regulation

---
