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Natural monopoly

Natural monopoly

Real World Monopolies

Describe an example of a real-world industry or market that would be considered by economists to be a natural monopoly.

  1. What characteristics of the industry make it a monopoly?
  2. What is the impact of the monopoly power on its customers?
  3. Why might government want to regulate natural monopolies?
  4. How might such regulation be structured?

150 words

 

For this discussion question, think of your water, electric, and gas.  Do you get those products from multiple producers or one?  How do they operate?  Aren’t prices for those needed products relatively cheap considering?

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Part 1

A natural monopoly occurs when the long-run average cost curve continuously falls over a range of output that is large. This occurs because of the fact that the most efficient number of firms in the market or industry is just one. The reason behind this notion is that a natural monopoly has an extremely high fixed cost thereby making it impractical to have more than one company producing and supplying the product or service (Posner, 1999). An example of a natural monopoly is the tap water supply system. For example in New York, tap………………..

APA

414 Words