Modern Non-Competitive Markets between Fiqh and Economic Analysis

Abstract

This paper lays groundwork for dialogue between economists and Muslim jurists on monopoly and non-competitive markets. Shariah prohibited monopoly, leaving details to jurists who concluded that monopolistic practices contravene Shariah only when: (a) Applied to necessities (majority opinion), or even to supplements (minority opinion), and (b) Where both demand and supply are price inelastic. Monopolistic practices then lead to large price increases that hurt the public. Jurists also deem it a grave sin to grant legal monopoly (in a good or a service) to a private party, if unjustified by the public interest. Freedom of entry to any market is fundamental in an Islamic eTchoen ocmoyn.c ept of monopoly among economists focuses on market structure, and is significantly wider than “prohibited monopoly” among jurists who focused mainly on monopolistic behavior. Seven applied issues are discussed from dual fiqh-economic perspective: patents, public utilities, government monopoly, monopolistic competition, oligopoly, mergers and unjustified legal monopoly.