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Natural Monopoly

Published on Jan 23, 2016

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PRESENTATION OUTLINE

NATURAL MONOPOLY

WHAT IT IS

MARKET RUNS EFFICIENTLY WHEN ONE LARGE FIRM SUPPLIES ALL OF OUTPUT

WHY HAVE THEM

SO WE DONT WASTE RESOURCES, BUILDINGS WHEN ONLY ONE IS NEEDED

GOVERNMENT INVOLVEMENT

CONTROL PRICES IT CAN CHARGE AND WHAT SERVICES IT PROVIDES

EXAMPLE

PUBLIC WATER B/C THEY WOULD USE MORE LAND & WATER THAN NECESSARY

EXAMPLE CONT.

ELECTRICITY GRID B/C THEIR WOULD BE TOO MANY POWER LINES

DESTROYING NATURAL MONOPOLY

BY CUTTING FIXED COST AND MAKE SMALL COMPANIES AS EFFICIENT AS ONE