In economics, a government monopoly or public monopoly is a form of coercive monopoly in which a government agency or government corporation is the sole provider of a particular good or service and competition is prohibited by law. It is a monopoly created, owned, and operated by the government. It is usually distinguished from a government-granted monopoly, where the government grants a monopoly to a private individual or company.

A government monopoly may be run by any level of government—national, regional, local; for levels below the national, it is a local monopoly. The term 'state monopoly' usually means a government monopoly run by the national government.

A state monopoly can be characterized by its commercial behavior not being effectively limited by the competitive pressures of private organisations. This occurs when its business activities exert an extensive influence within the market, can act autonomously of any competitors, and potential competitors are unable to successfully compete with it.

These activities have a major influence on the operational environment when their trading activities are not subject to competitive forces inherent within free trading markets. Therefore, this results in using its market dominance and influence to its advantage, in affecting how the market evolves over a long period of time. This is especially the case if the state monopoly controls access to vital inputs essential to operating within the market. 

The high degree of autonomy and ability to act independently in the market has been demonstrated by the ability to alter relationships with its customers to its advantage, without negatively impacting its dominant market share. A state monopoly's ability to increase the price or quantity of goods and services provided, without a relational change in its own operating costs (coupled with maintaining this price or quantity at above a market clearing rate), demonstrates its ability to disregard any competitive forces within the market. A state monopoly also retains the ability to reduce service value, or impose restrictive terms and conditions, without experiencing a loss in market share.

The theoretical purpose of state monopolies is to maximize collective welfare. This is based on the idea that public administrations are not strictly aimed at profit-making. Products or services, therefore, can be guaranteed to consumers of that supply of that product or service under the best conditions and at prices that are comparable to the expectations of the value and characteristics of the product or service.

However, the structure of a country's economy more broadly usually determines how state monopolies operate. In countries that are members of the OECD, sectors where there are state monopolies are usually those that are meeting the "needs of utilities and public services." Whereas, in developing economies, state monopolies can disrupt healthy business competition, and in centrally controlled economies, such stifling of private competition plateaus economic growth.

The concept of public goods, as produced and distributed under state monopolies, is that they are supplied at a level independent from, or inconsistent with, the actual market demand for the good. Therefore, the price does not reflect the utility of the product or service. Under Marxist economic ideology, this advocates for a centralized production system to account for the fact that this product or service should be universally available, and competition 'badly adapts' to the constraints to which the supply of these products or services is subject.