Natural monopolies

Name: Natural monopolies
Brand: Quizplus
Rating: 5.0 (58 reviews)

Question

Natural monopolies

Quizplus · Accepted Answer

Natural monopolies have one lowest-cost producer in an industry, which establishes a barrier to entry for potential competitors. This is due to economies of scale, as the firm's long-run average costs decrease as output increases. Since natural monopolies don't have viable competition, they require regulation to prevent exploitation of consumers. The long-run average cost may not be equal to zero, but it will be declining.

Natural Monopolies