Investopedia

Continue to Site »

Natural Monopoly

Filed Under »
Dictionary Says

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 Says

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.

Articles Of Interest

  1.

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.

  2. Antitrust Defined

    Check out the history and reasons behind antitrust laws, as well as the arguments over them.

  3. What Are Economies Of Scale?

    Is bigger always better? Read up on the important and often misunderstood concept of economies of scale.

  4. Economics Basics

    Learn economics principles such as the relationship of supply and demand, elasticity, utility, and more!

  5. Leading Economic Indicators Predict Market Trends

    Leading indicators help investors to predict and react to where the market is headed.

  6. Great Company Or Growing Industry?

    Look at the big picture when choosing a company - what you see may really be a stage in its industry's growth.

  7. Prisoner's Dilemma

    Learn more about this classic game theory scenario.

  8. Is Growth Always A Good Thing?

    Getting big quickly looks good, but companies can get into trouble when they do it too fast. Find out how to spot this trouble.

  9. What Is "Chained CPI?"

    Chained CPI is one of many ways to approximate the impact of rising or falling prices to consumers' pocketbooks.

  10. Natural Disasters: Issues Relating To Leaves Of Absence

    Small businesses are more likely to fail in the aftermath of devastation. How can you as an employee handle issues after a disaster?
comments powered by Disqus
Marketplace
Hot Definitions

  1. Disaster Loss

    A special type of tax-deductible loss, similar to a casualty loss, where a loss has been incurred by taxpayers who reside in an area that has been designated as a federal disaster area by the President.

  2. Fool In The Shower

    The notion that changes or policies designed to alter the course of the economy should be done slowly, rather than all at once.

  3. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  4. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  5. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  6. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.
Trading Center