A company has dominated the smartphone market for several years, leading to significantly higher prices and limited innovation. Which category best describes this situation?

This situation can be described as a form of market failure known as monopolistic behavior. When one company dominates the smartphone market, it has the power to set high prices because consumers have fewer alternatives. This lack of competition can lead to stagnation in innovation since the company may not feel the need to improve its products if they are not facing pressure from rivals. For example, if a single smartphone company controls 80% of the market, they can charge more for their devices without worrying about losing customers to competitors. In such cases, government intervention might be necessary to promote competition and encourage innovation, ensuring that consumers benefit from better choices and fairer prices.