Natural Monopoly: Mastering the Economics of Essential Services, Navigating Natural Monopoly

By Fouad Sabry

What is Natural Monopoly

A natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors. Specifically, an industry is a natural monopoly if the total cost of one firm, producing the total output, is lower than the total cost of two or more firms producing the entire production. In that case, it is very probable that a company (monopoly) or minimal number of companies (oligopoly) will form, providing all or most relevant products and/or services. This frequently occurs in industries where capital costs predominate, creating large economies of scale about the size of the market; examples include public utilities such as water services, electricity, telecommunications, mail, etc. Natural monopolies were recognized as potential sources of market failure as early as the 19th century; John Stuart Mill advocated government regulation to make them serve the public good.

How you will benefit

(I) Insights, and validations about the following topics:

Chapter 1: Natural monopoly

Chapter 2: Economies of scale

Chapter 3: Microeconomics

Chapter 4: Monopoly

Chapter 5: Monopolistic competition

Chapter 6: Perfect competition

Chapter 7: Imperfect competition

Chapter 8: Public utility

Chapter 9: Economies of scope

Chapter 10: X-inefficiency

Chapter 11: Anti-competitive practices

Chapter 12: Barriers to entry

Chapter 13: Monopoly profit

Chapter 14: Average cost

Chapter 15: Contestable market

Chapter 16: Market power

Chapter 17: Free entry

Chapter 18: Competition (economics)

Chapter 19: Rate-of-return regulation

Chapter 20: Minimum efficient scale

Chapter 21: History of microeconomics

(II) Answering the public top questions about natural monopoly.

(III) Real world examples for the usage of natural monopoly in many fields.

Who this book is for

Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Natural Monopoly.

• Language: English
• Publisher: One Billion Knowledgeable
• Release date: Feb 11, 2024

Book preview

Chapter 1: Natural monopoly

A natural monopoly is a monopoly in an industry where high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, a substantial advantage over potential competitors. In particular, an industry is a natural monopoly when the total cost of one firm producing the entire output is less than the total cost of two or more firms producing the entire output. In such a scenario, it is highly probable that a single company (monopoly) or a small number of companies (oligopoly) will provide all or the majority of the relevant goods and/or services. This occurs frequently in industries where capital costs predominate, resulting in large economies of scale proportional to the size of the market; examples include public utilities such as water, electricity, telecommunications, mail, etc. As early as the 19th century, natural monopolies were recognized as potential sources of market failure; John Stuart Mill advocated government regulation to make them serve the public