In economics Economics is the social science that studies the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek οἰκονομία from οἶκος (oikos, "house") + νόμος (nomos, "custom" or "law"), hence "rules of the house(hold)". Current economic, a natural monopoly occurs when, due to the economies of scale Economies of scale, in microeconomics, are the cost advantages that a business obtains due to expansion. They are factors that cause a producer’s average cost per unit to fall as scale is increased. Economies of scale is a long run concept and refers to reductions in unit cost as the size of a facility, or scale, increases. Diseconomies of scale of a particular industry, the maximum efficiency of production In microeconomics, industrial organization is the field which describes the behavior of firms in the marketplace with regard to production, pricing, employment and other decisions. Topics in this field range from classical issues such as opportunity cost to neoclassical concepts such as factors of production and distribution Distribution is one of the four elements of marketing mix. An organization or set of organizations (go-betweens) involved in the process of making a product or service available for use or consumption by a consumer or business user is realized through a single supplier, but in some cases inefficiency may take place.
Natural monopolies arise where the largest supplier in an industry, often the first supplier in a market, has an overwhelming cost advantage over other actual or potential competitors. This tends to be the case in industries where capital costs predominate, creating economies of scale Economies of scale, in microeconomics, are the cost advantages that a business obtains due to expansion. They are factors that cause a producer’s average cost per unit to fall as scale is increased. Economies of scale is a long run concept and refers to reductions in unit cost as the size of a facility, or scale, increases. Diseconomies of scale which are large in relation to the size of the market, and hence high barriers to entry In economics and mostly especially in the theory of competition, barriers to entry are obstacles in the path of a firm that make it difficult to enter a given market; examples include public utilities A public utility is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state-wide government monopolies. Common arguments in favor of regulation include such as water services The water industry provides drinking water and wastewater services to households and industry and electricity Electricity is a general term that encompasses a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning and static electricity, but in addition, less familiar concepts, such as the electromagnetic field and electromagnetic induction. It is very expensive to build transmission networks (water/gas pipelines, electricity and telephone lines), therefore it is unlikely that a potential competitor would be willing to make the capital investment needed to even enter the monopolist's market.
It may also depend on control of a particular natural resource. Companies that grow to take advantage of economies of scale Economies of scale, in microeconomics, are the cost advantages that a business obtains due to expansion. They are factors that cause a producer’s average cost per unit to fall as scale is increased. Economies of scale is a long run concept and refers to reductions in unit cost as the size of a facility, or scale, increases. Diseconomies of scale often run into problems of bureaucracy Bureaucracy is the collective organizational structure, procedures, protocols, and set of regulations in place to manage activity, usually in large organizations and government. As opposed to adhocracy, it is represented by standardized procedure that guides the execution of most or all processes within the body; formal division of powers;; these factors interact to produce an "ideal" size for a company, at which the company's average cost of production is minimized. If that ideal size is large enough to supply the whole market, then that market is a natural monopoly.
Some free-market-oriented economists argue that natural monopolies exist only in theory, and not in practice, or that they exist only as transient states.[1]
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In the event, the Kashagan exploration consortium restructured itself, giving the national monopoly KazMunaiGaz (KMG) a plurality stake marginally larger ...
