What is Natural monopoly?
[[File:NIGU transmision line near Te Kauwhata.JPG|thumb|270x270px|Public utilities such as electricity are examples of natural monopolies]] A '''natural monopoly''' is a type of [[monopoly]] in which a subject is the only seller and producer of a good or [[Service sector|service]]. It is impossible for a new firm to enter the [[market]] as there are very high [[barriers to entry]] and very high startup costs, similar to that of a normal monopoly. The natural monopoly term is usually used to describe markets with very high [[fixed cost|fixed costs]] compared to the [[marginal cost|marginal costs]] of selling the good or service, creating economies of scale that are large compared to the size of the market and hence resulting in very high barriers to entry.<ref>[[Jeffrey M. Perloff|Perloff, J]], 2012. Microeconomics, Pearson Education, England, p. 394.</ref> Examples of natural monopolies include [[public utility|public utilities]] such as [[water services]] and [[electricity]]. A natural monopoly often keeps getting economies of scale as more of a good or service is produced. == References == {{Reflist}} == Related pages == *[[Market failure]] {{stub}} {{Market-forms-footer}}