 |
Definition of 'Natural Monopoly'
A type of monopoly that exists as a result of the high fixed or start-up costs of operating a business in a particular industry. Because it is economically sensible to have certain natural monopolies, governments often regulate those in operation, ensuring that consumers get a fair deal.
|
 |
Investopedia explains 'Natural Monopoly'
The utilities industry is a good example of a natural monopoly. The costs of establishing a means to produce power and supply it to each household can be very large. This capital cost is a strong deterrent for possible competitors. Additionally, society can benefit from having natural monopolies because having multiple firms operating in such an industry is economically inefficient.
|
-
Check out the history and reasons behind antitrust laws, as well as the arguments over them.
Read More »
-
Is bigger always better? Read up on the important and often misunderstood concept of economies of scale.
Read More »
-
Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!
Read More »
-
|
|
