posted by .

How would one argue that there is no such things as a natural monopoly? What factor are involved?

I would make a case that natural monopolies do not exist base on evaluation of the classic examples of "natural monopolies": transportation, telephone, port facilities, electricity.
Alternatives always exist, and the existance of structural alternatives create competitive forces.

This is NOT directly involved with the question, but it MIGHT be useful anyways.

Natural monopoly is when one large firm can supply to the whole market at a lower average cost than a number of small firms.

The features of a Monopoly are that they are the only supplier of a product. There is no competition and this allows them to make abnormal profits. There are no homogenous products as a monopoly will try to make a variety of different products to stop other firms copying it. Monopolies are also price makers - which means that they can influence the price by restricting supply. There is also imperfect information in the market - consumers don't have all the information on the price and the products. (e.g. a monopoly can sell a product to a group of consumers at a high price, whilst hiding the fact that they are selling to another group of consumers a lower price. This would not be possible in a perfect market). Monopolies also create barriers to entry to stop other firms entering the market.

A firm is a pure monopoly only if it is the only supplier of a good or service.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Economics

    A firm is a natural monopoly if: a) its average cost curve falls throughout its relevant output range. b) the firm owns an essential natural resource used in making the product. c) the government has granted the firm the right to a …
  2. English

    I am writing an essay on things from the natural world and I need to think of categories for the things in order to write paragraphs. The sun, moon, sea, and sea shore are all things from the natural world. What one smaller category …
  3. economics

    How can you justify the existence of government-granted monopolies for public utilities such as natural gas distribution and electricity in the light of traditional economic argument that the more competition there is, the more likely …
  4. Economics

    Why is it important for the government to regulate the activities of natural monopolies?
  5. Economics

    (a) Explain what is meant by the term “natural monopoly”. (b) Construct a diagram showing the average and marginal cost curves, and the demand and marginal revenue curves for a natural monopoly. Use your diagram to explain why …
  6. Economy Today

    Do total profits (A) decrease, (B) increase, or (C) stay the same when new technology reduces average total costs (shifts ATC downward in Figure 26.2 ) in (a) An unregulated natural monopoly?
  7. economics

    describe and compare the following types of monopolies and the benefits of their existence: natural, technological and franchises. thank you
  8. Science

    Think about the factors that will influence the evolution of humans in the future. Name one factor that would exert influence through the process of natural selection and one factor that would exert influence through artificial selection. …
  9. science help

    Two factors which cause global climate change are listed below. Factor 1: Volcanic eruptions. Factor 2: Changes in the amount of Sun’s heat received by the Earth’s atmosphere and surface. Which of these statements is correct about …
  10. college, history

    What does Robert Bartlett in the "The Natural and the Supernatural in the Middle Ages" say about things about being beyond nature and what examples does he give?

More Similar Questions