Which of the following is necessary for a natural monopoly?
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Answer:
A natural monopoly is a monopoly in an industry in which high infrastructural costs and ... Often, a large portion of these costs is required for investment. Larger industries, like utilities, require enormous ...
Most of us are well-acquainted with the idea of a monopoly: when there is only one firm prevailing in a particular industry. However, from a regulatory view, monopoly power exists when a single firm controls 25% or more of a specific market. For example, De Beers is known to have a monopoly in the diamond industry. Natural monopolies are a specific variant of this situation.
In the United States, the Federal Trade Commission (FTC) is in charge of regulating monopolies.
Natural monopolies occur when it makes the most sense, efficiency-wise, for only one firm to exist in a given sector. This generally happens when the industry involved has extremely high fixed costs. (Fixed costs are those that remain the same regardless of the number of goods or services produced. Rent, for example, is a fixed cost.) Natural monopolies are especially common when a good or service requires very large-scale infrastructure to function
Most of us are well-acquainted with the idea of a monopoly: when there is only one firm prevailing in a particular industry. However, from a regulatory view, monopoly power exists when a single firm controls 25% or more of a specific market. For example, De Beers is known to have a monopoly in the diamond industry. Natural monopolies are a specific variant of this situation.
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