Apr 21 2012

Natural Monopoly

A market in which the demand for the product intersects the single firm’s average total cost curve while it is still downward sloping. In other words, there is not enough demand to warrant more than one firm producing the good. Society is actually better off with a single producer. Examples include utilities such as electricity and water. Often natural monopolies are regulated by government to assure a more socially optimal level of output and price.


About the author:  Jason Welker teaches International Baccalaureate and Advanced Placement Economics at Zurich International School in Switzerland. In addition to publishing various online resources for economics students and teachers, Jason developed the online version of the Economics course for the IB and is has authored two Economics textbooks: Pearson Baccalaureate’s Economics for the IB Diploma and REA’s AP Macroeconomics Crash Course. Jason is a native of the Pacific Northwest of the United States, and is a passionate adventurer, who considers himself a skier / mountain biker who teaches Economics in his free time. He and his wife keep a ski chalet in the mountains of Northern Idaho, which now that they live in the Swiss Alps gets far too little use. Read more posts by this author
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