Natural Monopoly

A monopoly is a firm which is the only one producing and selling a particular product. A natural monopoly is a monopoly in an industry in which it is most efficient (involving the lowest long-run average cost) for production to be concentrated in a single firm. This market situation gives the largest supplier in an industry, often the first supplier in a market, an overwhelming cost advantage over other actual and potential competitors, so a natural monopoly situation generally leads to an actual monopoly.
Posts about Natural Monopoly
  • The time to think about middlemen is before there's only one

    … are unable to choose a different middleman? In a town with ten newspapers, finding a newspaper that brings you the truth you seek is not a challenge. But network effects and lock in mean that in more and more arenas, there's a natural monopoly arising. The simple example is cable TV. It doesn't pay to wire a town with five or six competing cable…

    Seth Godin/ Seth Godin's Blog- 3 readers -
  • This is not a promotion

    The internet and big media are wrestling with chokepoints. Cable TV companies, for example, are a natural monopoly in the home. Everyone only has one provider. If the provider has an argument with a TV network, they kick them off, the signal doesn't get through, the viewer gets nothing. One of the arguments behind the common sense of net neutrality is that chokepoints and to ...

    Seth Godin/ Seth Godin's Blog- 3 readers -
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