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.

A natural monopoly is a market condition in which competitive forces such as competition and innovation are at a minimum due to one company having a large amount of control over the industry. A natural monopoly may be present when a good or service has high start-up costs or requires a lot of physical capital to produce.

A natural monopoly is a company that has such high barriers to entry that it can corner the market and charge high prices without fear of competition. This type of business is only an issue in areas where it is difficult for other firms to enter and compete.