The government in the town of Rodenham has granted exclusive rights to a few telecommunications companies to operate in specific geographic areas. The companies have to provide their services in the areas allotted to them, and no company is allowed to extend its services to the areas allotted to its competitors. This system has been put in place because it would be inconvenient for each company to build its own infrastructure in all areas. The given scenario exemplifies:

Question

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This scenario exemplifies a natural monopoly, where exclusive rights are granted to companies to avoid the inefficiency of multiple infrastructures being built by different companies in the same area.

The Government in the Town of Rodenham Has Granted Exclusive