When it is economically or physically impractical (or undesirable) for more than one entity to perform a service in a given market, then the single provider is said to have a natural monopoly. Monopoly industries are regulated in order to protect consumers from collection of excessive profits.
An industry in which the average cost of production reaches a minimum at an output rate large enough to satisfy the entire market, thus competition cannot be sustained and one firm becomes the monopolist.
A situation where one firm can produce a given level of output at a lower cost than can any combination of multiple firms. Natural monopolies occur in industries that exhibit decreasing average long-run costs with increasing size (economies of scale). Historically, electrical generation has been assumed to be a natural monopoly. This assumption is being questioned in the electrical industry restructuring debate.
A market that has high natural barriers to entry (usually because of increasing returns to scale) is referred to as a natural monopoly because such a market has a tendency to become a monopoly. Indeed, in the presence of increasing returns to scale, a market that consists of a single large producer is the most economically efficient. Traditionally, governments have dealt with natural monopolies by granting an official monopoly to a business and introducing regulations placing substantial controls on the behaviors in which that business is allowed to engage. (e.g. what pricing schemes are allowable). Electical power and telecommunications are examples of natural monopolies that have been subject to government regulation. Recently, however, there has been a move in the United States towards deregulation of telecommunications and attempts to restructure markets so that the conditions that produce natural monopolies are eliminated.
A situation that occurs when one firm in an industry can serve the entire market at a lower cost than would be possible if the industry were composed of many smaller firms. Gas and water utilities are two classic examples of natural monopolies. These monopolies must not be left to operate freely; if they are, they can increase prices and profits by restricting their output. Governments prevent such a scenario by regulating utility monopolies or providing utility services themselves.
a monopoly that exists because average costs of production are declining beyond the level of output demanded in the market, thus making entry unprofitable and making it efficient for there to be a single firm
A situation where one firm can produce a given level of output at a lower total cost than can any combination of multiple firms. Natural monopolies occur in industries which exhibit decreasing average long-run costs due to size (economies of scale). According to economic theory, a public monopoly governed by regulation is justified when an industry exhibits natural monopoly characteristics.
A condition where competition would not be expected to develop. For example, the gas distribution function is a natural monopoly because it is extremely unlikely that once a distribution company was established in an area a competing company would enter the same market and construct additional distribution facilities. However, the selling of gas to retail customers is not a natural monopoly because a relatively large number of companies would be able to offer competitive alternatives. [ monopole naturel
exists when the entire market demand can be served at lowest aggregate cost by one supplier due to the nature of the economies of scale available, relative to total market size. Competition in such markets would likely be unsustainable due to the economies available to the incumbent supplier.
a continuous physical network that needs to reach almost every piece of property in a region, such as roads and distribution networks (but not sources or sinks) for water, electricity, natural gas, sewage, and wired telecommunications