A local government prevents any firm from competing with a natural monopoly firm. Those people who believe this is a wise policy action would likely say

Question

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Those who support preventing competition with a natural monopoly firm argue that allowing competition would lead to a waste of resources as new firms would enter the market only to be driven out of business by the natural monopoly firm. This is because the natural monopoly firm has already established itself in the market and has advantages such as economies of scale that make it difficult for new firms to compete. By allowing the natural monopoly firm to operate without competition, it can continue to provide a necessary good or service to the public efficiently and at a lower cost.

A Local Government Prevents Any Firm from Competing with a Natural