What is a natural monopoly?
Natural monopoly is an economic situation in which the main supplier of a particular goods or services has essentially complete control of the market. This happens most often when the industry is either in their childhood or other companies have unsuccessfully attempted to gain a significant market share. Other causes of the natural monopoly prevail when all the competition was expelled from business. This is the most common in public services, such as waste disposal and gas services when one company has become so great that it effectively caused all competition. In order to limit prices for consumers to afford public services, companies cooperate with government agencies to regulate standard services. Sit to the extent that it has reduced business costs to the extent that the competition cannot match. Essentially, no other company on the market can take away competing business and try to compare or undermine the price of the monopoly. This applies regardless of the type of business,If the company has almost complete control of the market.
When a bureaucratic organization hit a natural monopoly, it has many options with how to regulate the prices of product or service. These options range from the company to regulate the company's public ownership. Government entities are usually involved in a limited manner by regulating the amount of profit that the company can achieve, for example to determine the return rate of 10 percent. Governments can also intervene with legislation and establish a competition managed by themselves or even simply the Semi Society and turn it into public works. Other options include breaking the company into smaller companies, as was the case with AT & T® in the United States in 1984.
The existence of natural monopolies in the free market society is the basis for debate between economic theorists. Some economists tIt crushes that monopolies are only theoretical in such companies and therefore the market can be exposed to competition. People who occupy this position do not believe in any government regulation. At the other end of the spectrum are those who feel a natural monopoly can occur, even if there are more companies. For example, COKE® and PEPSI® control the vast majority of soda industry and charge about the same price for products.