Rationales for public policy: market failures - Natural monopoly
3 important questions on Rationales for public policy: market failures - Natural monopoly
A natural monopoly occurs when:
Average cost declines over the relevant range of demand.
Industries with low barriers to entry and decreasing average costs, which, because of the threat of potential entry, are said to be:
Contestable markets
Harvey Leibenstein coined the phrase X-inefficiency to describe:
The situation in which a monopoly does not achieve the minimum costs that are technically feasible. Also called cost inefficiency, operating inefficiency or productive inefficiency.
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