A market situation with only one seller. A natural monopoly exists when the monopolist’s solo position is due either to the exclusive possession of some essential input, or to the existence of economies of scale so that no entrant can be profitable once an incumbent firm is established. A statutory monopoly exists when the entry of competitors is forbidden by law. Monopoly is an example of market failure that leads to economic inefficiency. The extent of inefficiency can be measured by deadweight loss. The extent of deadweight loss is increased if a monopoly expends resources to sustain barriers to entry. See also statutory monopoly.