What is a natural monopoly exists when?

a single company in an industry can supply a product or service more efficiently than multiple companies due to high fixed costs and economies of scale. This can lead to the company having a significant competitive advantage and potentially dominating the market.

Natural monopolies often occur in industries such as utilities (e.g. water, electricity, gas) where it would be inefficient to have multiple companies duplicating infrastructure. Other examples include industries with high barriers to entry, such as airlines or railroads.

In some cases, natural monopolies are regulated by the government to ensure fair pricing and accessibility for consumers. This can involve setting price caps, quality standards, or requiring the company to provide equal access to competitors.

Natural monopolies can be both beneficial and detrimental. On one hand, they can lead to cost savings, innovation, and improved efficiency. On the other hand, they can also reduce competition, potentially leading to higher prices, lower quality, and reduced consumer choice.