Natural monopoly - Definition

A monopoly that does not arise from government Intervention in the marketplace to protect a favored firm from competition but rather from special characteristics of the production Process in the industry under the current state of technology. A natural monopoly exists when there is great scope for economies of scale to be exploited over a very large Range of output. Indeed the scale of production that achieves productive efficiency may be a high percentage of the total market demand for the product in the industry.

This might occur when production of the good requires extremely large initial Capital investments to even enter the market in a modest way but then producing additional output requires only very modest additional outlays beyond the fixed initial Investment.

Terms near "Natural monopoly"

Negative Carry Pair
Negative or Bearish Divergence
Net Asset Value (NAV)
Net Position
Net Worth
New Home Sales
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