natural monopoly

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Natural Monopoly

A situation in which the barriers to entry for an industry or product are so high that it is not profitable for a second company to make an attempt. For example, an area may have only one utility company because it is prohibitively expensive to start another one. Governments generally regulate profits for natural monopolies to protect consumers.

natural monopoly

a situation where ECONOMIES OF SCALE are so significant that costs are minimized only when the entire output of an industry is supplied by a single producer so that supply costs are lower under MONOPOLY than under conditions of PERFECT COMPETITION and OLIGOPOLY. The natural monopoly proposition is the principal justification for the NATIONALIZATION of industries such as the railways. See MINIMUM EFFECT SCALE.
References in periodicals archive ?
The notion that utilities are natural monopolies means that service has to come from a single provider, which is legally required to serve consumers at the lowest feasible cost--determined, as so often happens, by regulators beholden to the industry itself.
Natural monopolies existed in old-line industries, of course.
These natural monopolies create challenges with respect to pricing,
Our observations from the Estonian publicly owned natural monopolies in several sectors do not suggest different behaviour patterns compared to privately owned ones.
Kazakhstan's Samruk-Kazyna National Welfare Fund Head Umirzak Shukeyev offered the Kazakh Agency on Regulation of Natural Monopolies an opportunity to withdraw activity of oil export and transit subjects from being regulated.
As part of the debate over the governmentaACAOs recent plans to freeze tariffs for natural monopolies, Transneft has detailed its investment programme for 2014-18 (approved by the companyaACAOs Board of Directors on 10 September) and suggested that it might need to be reconsidered down, especially given another initiative to introduce a property tax on pipelines.
Those include the defects of the energy sector, unemployment, the destruction of nature, and the introduction of an effective regulation of natural monopolies," add they.
Offer to index tariffs of natural monopolies might make a make a significant effect in the form of financial results reduction in the companies of the power energy sector.
To note, Chairman of the Russian Federation Council's Commission on Natural Monopolies, Co- Chairman of the Russian-
We, as a matter of principle, do not support an additional increase in tariffs for the natural monopolies on top of what had already been expected," Nabiullina told reporters.
regard as natural monopolies and are thus inherently incapable of being
While any issue involving government authority over private industry should raise deep concerns, there needs to be at least limited government oversight to keep the internet as free and open as possible--a totally free market in this case won't benefit consumers and future innovators since many providers from a geographical standpoint are natural monopolies.