E.4.4+Describe+the+characteristics+of+natural+monopolies+and+the+purposes+of+government+regulations+of+these+monopolies,+such+as+utilities

 =Describe the characteristics of natural monopolies and the purposes of government regulations of these monopolies, such as utilities.=



Characteristics of Natural Monopolies

 * For information on the [|origin of natural monopolies] and the economic theorists that studied them, see here.

A natural monopoly is a situation where for technical or social reasons there cannot be more than one efficient provider of a good. Public utilities are usually considered to be natural monopolies. Examples include water services and electricity.  Natural monopolies tend to occur in cases where capital costs predominate. 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.  

** Examples of Natural Monopolies **

 * **Water/Electric Utilities**
 * Water and Electric service providers are considered Public Utilities, and often have a natural monopoly on the water and electric service in their given communities because of infrastructural impediments.
 * See [|Electricity and Its Regulation] from the Library of Economics and Liberty.
 * **Railroads**
 * Railroad companies also tend to hold natural monopolies because of infrastructural conditions, it not being economically viable to lay new railroad tracks where ones already exist.
 * See here for information in the [|rise of the Railroad monopolies]
 * For a conversation about the[| African American Railroad Experience], and the growth of Black Railroad worker's unions, see here.
 * **Telephone Lines**
 * For a long time Alexander Graham Bell's company had a natural monopoly on the telecommunications industry, until it was forcibly split up in 1984.
 * For more information on that breaking up of the monopoly, see [|here].

Regulating Natural Monopolies
 See here for a lesson guide on [|regulating natural monopolies]  See [|here] for a Youtube video with a basic explanation of natural monopolies
 * Because of the problems that arise whenever monopolies exist, governments enact regulations to avoid these problems when such natural monopolies cannot be avoided.
 * To see regulations regarding Utility Service Providers in Massachusetts, see [|here]

Also see [|here] for a Study.com video with a definition and examples of natural monopolies

 [|Electricity and Its Regulation] from the Library of Economics and Liberty. For an historical perspective, see [|TVA: Electricity for All] focusing on efforts during the New Deal to bring electricity to rural areas in the South.  (1) Natural Monopoly Law and Legal Definition. US LEGAL. Retreived April 25 2012 [] (2) Delco Electric Company Image (Cropped). Wikimedia Commons. Retrieved April 25 2012