What Is a Natural Monopoly?

Natural monopoly is also called "natural oligopoly". The large-scale production and operation of certain products and services by a single enterprise is more efficient than the simultaneous production and operation of multiple enterprises. Such as running water, electricity supply, telecommunications, post, etc. Due to the scarcity of resources, economies of scale, and economies of scope, there is a high probability that companies that provide a single product or service or companies that jointly provide most products and services will form a company (monopoly) or a very small number of companies (oligopoly) high. ^[1]

Natural monopoly

Natural monopoly

Since the 1980s,

Theoretical Basis of Economics. West

It is generally believed that there are two reasons for the emergence of natural monopoly: one is the economy of scale and the other is the economy of scope. ^[2]

1. Efficiency dominance

From the economic theoretical basis of natural monopoly, whether it is

"Which industries are natural monopolies?" And "Which industries practice natural monopolies?" Are two different questions. The former is related to the judgment criteria of natural monopoly. It not only has the function of judging the actual market structure, but also has the function of judging the scope of natural monopoly. Natural discussion and analysis. Through the previous analysis of the concept, theoretical basis, and characteristics of natural monopolies, we should have a certain understanding and grasp of the judgment standards and industrial scope of natural monopolies.

Judgment criteria for natural monopoly:

First, the industry's ready-made market structure has only one or a few sellers offering similar or identical products. In other words, the current market of the industry is a monopoly or

No matter how the natural monopoly industry reforms, they will all be regulated by law. This is not only determined by the special status of the natural monopoly industry, but also an inevitable requirement of the rule of law. By examining the legislative content of natural monopoly industries in various countries in the world, we should establish a legal system covering the following basic content to regulate the natural monopoly industry, make it enter a benign operation and development state, and promote the sustained, rapid and healthy development of our national economy and social stability.

1.Legal system of management subject

Due to the breadth of the fields involved in the natural monopoly industry and the multifaceted nature of its interests, it is impossible to unite the subject that manages the natural monopoly industry in accordance with law. From the perspective of maintaining and guaranteeing the resources needed for the healthy development of natural monopoly industries, the management bodies of natural monopoly industries mainly involve antitrust authorities, industry leaders, and other relevant government functions such as anti-unfair competition agencies, Price departments, etc., perform their corresponding management duties in accordance with their respective jurisdictions, and cooperate with the main natural monopoly industry leaders to manage the natural monopoly industry.

2. Legal system of management

Because the natural monopoly industry has a decisive influence on daily life, in earlier times, countries adopted a nationalization approach and placed it under strict government control. The main control methods are entry control and price control. Due to the failure of government control measures and technological development and other factors, since the mid-1970s, Western countries have begun a massive natural monopoly industry reform, and gradually tend to deregulate and appropriately introduce competition. The simplistic investment pattern was broken, and the natural monopoly industry operated in a diversified manner. Corresponding to this, great changes have taken place in the regulation of natural monopoly industries. Regulatory methods have become more diversified and more scientific.

3. Supervising the legal system

Supervision is an important part of the social management system and plays a controlling role in the development and change of society. Natural monopoly industry has always been an eventful field. Without a sound legal supervision system to supervise and manage it, it is difficult to avoid many problems. The supervision and management of natural monopoly industries mainly include three aspects:

First, the supervision of legal monopoly industry operators by legal management agencies;

The second is the supervision of the operators of natural monopoly industries;

The third is social supervision of statutory management agencies.