Islam’s Position on Monopoly and Pricing Commodities

Dr. Monzer Kahf, a prominent Muslim economist and counselor, answers: Pricing commodities and services is left to the seller and buyer to agree on. There are market conditions that make one of them more or less powerful, and there are certain services and sometimes goods that may be monopolized by individuals and by government. Monopolies always call for government intervention, to either break it or determine prices at non-exploitative levels. This is the Shari’ah position on monopolies.

Governments’ monopolies may very often be exploitative. They are often considered a source of public revenues. They are in fact bad sources of revenues because they are often unjust and discriminatory. Both private and government monopolies usually hold onto obsolete technologies and contribute little to development and research.

Price discrimination between classes of customers is very common. You may notice that in Disney land and in Sea World, even popcorn price are triple their prices outside. Price discrimination of essential goods is very bad unless it is done to give concessions to the poor. In fact the Shari’ah prohibits any price discrimination that charges the poor anything above what other customers are charged. Price discrimination in non-essential goods and services is left to be determined by the public interest of the country and whenever it serves the public interest it is permissible. In California, for instance, there are different prices in several entertainment parks between Californians and non-Californians, and there are such price discrimination in Morocco, France, Egypt, Briton to mention only a few that I know. What is unfortunate is that Muslims are divided in many countries, and this results in considering Muslims from other countries as foreigners and treated like other foreigners!