In cases of natural monopolies, society would be better off with many firms competing with each other.

Question

Quizplus · Accepted Answer

Natural monopolies occur when the economies of scale of an industry are so large that it makes sense to only have one firm producing to minimize production costs. Competition in such cases may lead to duplication of infrastructure and higher costs for consumers. Therefore, in the case of natural monopolies, society is likely to benefit more from a single firm operating under regulation rather than multiple firms competing with each other.

In Cases of Natural Monopolies, Society Would Be Better Off