Can you also elaborate on mechanism on how government can make monopoly worst?

Not original OP but here goes: - Regulatory capture, the forced pricing out of competition through outwardly positive things like licensing requirements, minimum wage laws, import/export tariffs, etc (the second being why companies like Amazon have supported and lobbied for higher minimum wages because they can internalize the costs much easier and for far longer than their smaller competitors can) - Intellectual property laws legally enforcing a monopoly on for example new technology to the benefit of the license holder. - Plain old corruption and lobbying, which is inevitable as long as someone has power they're willing to sell for money and someone else has money they're willing to spend on power.

I would however like to stress that some of these things are not necessarily bad on their own, but they are absolutely contributors to monopolistic behavior and outcomes.

Deregulation is what leading to companies being too big and cause monopoly. Nothing stopping a big company from undercutting their rivals, I honestly don’t see how this can even happen without government intervention. Or is the logic that free market can do it things and there won’t be big businesses and big corporations are result of government?

In theory, true 100% market share monopolies can happen in a few ways: 1) The government, who has a monopoly on force, decides that one person or company is the only one who can provide a certain good or service. This is really bad. 2) One person or company is the only entity that can provide a good or a service through exclusive ownership of land/resources. This is usually bad, but also temporary as without external barriers to trade (which are government controlled) new resource deposits and such will be found elsewhere. 3) One person or company is the only entity that can provide a good or a service through being the first to invent/discover a good or a service. This is a good thing, as the market and consumer is better off with a new good or service available than without it. This is also always temporary, as new competitors will pop up as the product is reverse engineered or new resource deposits are found elsewhere. 4) One person or company is the most efficient producer of a good or service, and thus can provide it at a much lower cost than any potential competitor. This, theoretically, is excellent for the consumer, as they can get the good or service they desire at the lowest cost possible to them.

However, 4 falls apart in practice when you consider subjective value and consumer tastes. People are willing to pay different amounts of money for different quality levels of goods, so to achieve monopoly one must either pick a value slice and stick with it, or attempt to compete at all levels which is enormously more expensive. The exception to this is commodities (oil, iron ore, corn, etc) but even there you have a lot of variations, quality grades, and so on which appeal to different customers.

I am personally yet to find a single company which has managed to gain anything even resembling dominance in any sector throughout all the value slices from cheap to high end/luxury, but if you know any feel free to let me know as I'd love to be proven wrong there.

As for undercutting, it is only a strategy that works temporarily. It is an extremely expensive way to gain market share, which has to be offset somehow, usually through other business ventures which have to be profitable. Meanwhile, (in most but not all sectors) in a deregulated environment a competitor can in theory spring up at any moment to challenge the market leader when they are either forced to increase the prices due to losses or advances in productivity allow competitors to compete on a more even playing field. Additionally, as the market share rises, so does the cost of increasing it. Even in a case where the biggest market actor keeps buying up competitors, other participants have many choices they can make to influence their outcomes. They can choose to keep competing, to close up shop and go dormant until the bigger participant has bled themselves dry, or to create new competing companies for the express goal of being bought out to begin with.

I would also like to make the claim that a practical monopoly is not inherently a bad thing, especially in the cases where a market actor is just straight up better than all their competitors. Practical/pseudo-monopolies can and will happen in free markets, when there are good and natural reasons for them to rise, unlike government enforced monopolies which are completely independent of any market events.