Posted by Anonymous on Friday, November 19, 2010 at 7:06pm.
Governments support these monopolies because they are natural monopolies, i.e. in these markets the efficient market structure is a monopoly. These markets all involve high initial captial outlay and very low marginal costs, and if there was more than one firm in the industry then the costs would be higher than if there was one. To prevent exploitation of the monopoly status and profit maximization, the government regulates the monopoly to where it breaks a normal profit. This is more allocatively efficient than a normal monopoly. It still is less efficient than perfect competition, but its a good way to keep costs low.
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