(from Aluminum Company of America) is the world's third largest producer of aluminum, behind Rio Tinto Alcan and Russia's Rusal, with corporate headquarters in New York City. Alcoa is a classic example of how monopoly was created and maintained for 50 years. Alcoa was successful in this because of various strategies it adopted to maintain monopoly power. In the late nineteenth century, Alcoa had its first taste of Monopoly when it acquired a patent on the new method developed by it to remove oxygen from bauxite to obtain aluminum, which precluded other firms in the industry from using it. Thus giving it a competitive advantage over other firms in the industry. This patent expired in 1906, however by then Alcoa had already patented another effective method to produce Aluminum in 1903, thus continuing its advantage over other firms which lead it towards monopoly power.
In 1909 when Alcoa's patent expired, by then it had already on its way to control the supply of bauxite to America which was required to produce aluminum. It signed long term contracts with producers of bauxite prohibiting them to supply bauxite to any other American firm, it entered in agreement with foreign producers of aluminum not to export aluminum to each other's market and it went as far as purchasing electricity only from those firm which agree not to sell electricity to other aluminum producing firms.
It was a major setback for Alcoa when courts in 1912 invalidated all the contracts and agreement. But because of the monopoly power it had over the previous decade, Alcoa had grown in to a large organization and by expanding productivity is was able to retain Monopoly due to economies of scale. Economies of scale helped it to match supply with demand and Pricing aluminum at low cost – which could not be matched by other firms and also discouraged new entrants from entering this industry. The end to monopoly power of Alcoa came after World War 2 (1945), when Alcoa was not allowed to purchase government financed world war built during the war.
