What is a natural monopoly? Back to list

Member SinceJul 08, 2021

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Nov 24, 2021 a 06:17
If a single company can provide the desired market demand at a lower cost than two or more similar companies, the industry is considered a natural monopoly. In more detail, it refers to the performance of one firm compared to the performance of others in the same industry. Therefore, there may be economies of scale in producing a specific product and serving the market is economically viable for only one organization. Another reason for the emergence of a natural monopoly may be that infrastructure costs are so high that two companies competing on the market would make it completely unprofitable.

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