If a natural monopoly was broken into several smaller competing firms,

Question

Quizplus · Accepted Answer

Natural monopolies benefit from economies of scale because they can produce at a lower cost than smaller firms. If the monopoly were broken up, the new firms would lose these economies of scale, causing a potential increase in costs for both the producers and consumers. Therefore, society would be worse off because the cost savings of the natural monopoly would no longer exist.

If a Natural Monopoly Was Broken into Several Smaller Competing