Gas, electric power, and other local utilities are also examples of natural monopolies. Hence, in the market for local telephone services, there is a need for only one firm competition will not naturally arise. The telephone company's long‐run average costs may eventually rise but only at a level of output that is beyond the level the local market demands. For example, a local telephone company's marginal and average costs tend to decline as it adds more customers as the company increases its network of telephone lines, it costs the company less and less to add additional customers. A few monopolies arise naturally, in markets where there are large economies of scale. Not all monopolies arise from these kinds of barriers to entry. The market for diamonds, for example, is dominated by a single firm that owns most of the world's diamond mines. Limited access to resources: A monopolistic market structure is likely to arise when access to resources needed for production is limited.If these start‐up costs are large enough, most firms will be discouraged from entering the market. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |