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Glossary Energy Engineering / Term

Natural Monopoly

A situation where one firm can produce a given level of output at a lower total cost than can any combination of multiple firms. Natural monopolies occur in industries which exhibit decreasing average long-run costs due to size (economies of scale). According to economic theory, a public monopoly governed by regulation is justified when an industry exhibits natural monopoly characteristics.

Permanent link Natural Monopoly - Creation date 2020-04-22


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