In early modern England (and later Britain) granting a monopoly was an attractive way for rulers reward to favourites and courtiers. Firstly and most importantly, it was cheap, or from the point of view of the ruler, free. The governments of the period were very poor and strapped for cash, and a monopoly didn't take money out of the treasury or eat into future revenue by granting crown lands (landed estates being the other common reward). Secondly, unlike grants of land, a monopoly would not create a powerful new territorial magnate who would upset local elites, annoy the established nobility and possibly be disloyal to the crown. Thirdly, a monopoly was as easy to take away as it was to grant (as Elizabeth did to the Earl of Essex), which meant that courtiers who were being funded by a monopoly depended for their financial survival in keeping the monarch happy and the government had another lever to control them.

The usual way it worked was that if say Lord X was granted the monopoly on importing sugar, those who actually did import sugar would have to come to an agreement with him, either paying so much per pound (weight) imported, a percentage of their profits, a fee to be allowed to import it (rather like sub-contracting) or any combination of these. Of course, the people actually doing the work, the merchants, objected strongly to some fat idle courtier or royal favourite creaming off the profits of their hard work, and the system was not only totally corrupt but looked it too. Granting of monopolies was one of the major grievances that led up to the civil wars of the 1640s and provided the opposition with endless ammunition.

As well as these parasitic monopolies, there were more constructive ones. Monopolies could be, and were, granted to encourage investment in foreign trade. For example, by granting a consortium of merchants a monopoly on trading with Lebanon and Palestine, as James I did, the merchants would be encouraged to make the major investments to open up business ventures and trade routes with these areas. These kind of deals were important in encouraging trade, joint ventures, companies, and eventually, colonisation.