natural monopoly

natural monopoly definition - business

natural monopoly

An industry in which a business will have such enormous economies of scale that a single firm can effectively and efficiently supply the market at lower cost than two or more firms. A natural monopoly will dominate these industries if government does not impose restrictions. Electric utilities are generally considered natural monopolies.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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