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…

    Seth Godin/ Seth Godin's Blogin Google- 4 readers -
Get the top posts daily into your mailbox!