The Myth Ofnatural Monopoly Analysis

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The article written by Thomas J. DiLorenzo entitled The Myth ofNatural Monopoly, as the title states is about unravelling and explaining the natural monopoly myth. Natural monopoly is defined as a monopoly in which only a single firm can obtain the utmost benefit from the industry it is in. This usually happens when there is an extremely high fixed cost in production. As production increases, the long run average cost of production decrease as fixed cost is spread over the units produced. It would be more beneficial for the manufactured product to be produced by only one producer since more investors would possibly bloat the price considering the high fixed cost involved in manufacturing. Ideally, competition in the market is essential. In a consumer’s point of view, several manufacturers would mean several choices. In purchasing a toothpaste for instance, in our country, there are several producers which are capable of producing toothpastes which vary in quality and type that would fit the specific needs of consumers. In natural monopoly, a commodity can only be derived from one source or can be derived from lots of suppliers but only one sells it at a cheaper cost. This is true especially with needs or commodities with a high fixed cost of producing the product. An example of this would be electric companies or other utility companies. Of course, electricity and water is a primary need by every household. Since these industries require a huge investment and expensive

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