Natural Monopoly

Main article: Natural monopoly A natural monopoly is a special case in which a company can produce all production to market needs at a lower cost than if it had a number of companies competing. This usually happens in markets in which firms have to make a high initial investment to enter (economies of scale). The incentives for other firms enter are invalid and, secondly, it would be inefficient, ie it is more efficient that only one company in the industry as the average costs tend to 0 as increases the amount making business more profitable and help the monopolist to lower the price. While captives are also its consumers have a natural monopoly, unlike a classic, is socially efficient. One example is the distribution of potable water in cities. Over time any natural monopoly is destined to die either by legislative changes, or due to technological changes.