Natural Monopoly

(These are just my half baked thoughts. I am happy to adjust them in part or in whole, and to annotate them with links to relevant research etc.)

In Economics (and econ. of capitalism) it is generally understood that Monopolies are Bad.

Monopolies mean that a single player gets to control any one or more of the follow: prices, supply, features. These cause what is called "Market Inefficiency" which, in economics, is the big bad, the worst thing, a terrible no good problem to have.

However, there is also thing that happens where people say:

"Some monopolies are inevitable."

For example, in a city, it is very hard to have two different "street networks" -- the main network of streets and a lesser known alternative network of streets.

No, there will be only one network of streets.

(Networks are a common scenario where monopolies are considered inevitable; the 'network effect' is a mathematical force that applies to networks and shows why one has more power than two; in the case of city streets you also see the geographic impossibility of having two competing networks due to the cost of building overpasses, underpasses or other intersections).

Inevitable monopolies are also often referred to as "natural monopolies."

 

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