tutor2u | Explaining Natural Monopoly

Study Notes

Explaining Natural Monopoly

Level:
A Level, IB
Board:
AQA, Edexcel, OCR, IB, Eduqas, WJEC

Last updated 24 Mar 2019

In this study note we explore the key concept of natural monopoly.

What is a natural monopoly?

For a natural monopoly the long-run average cost curve (LRAC) falls continuously over a large range of output. The result may be that there is only room in a market for one firm to fully exploit the economies of scale that are available and therefore achieve productive efficiency.


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