Natural monopoly

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  • Created by: meloakes
  • Created on: 29-03-15 11:43
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  • Fixed costs are very high
    • Falling LRAC due to economies of scale
      • Natural monopoly: Where a monopolist has an overwhelming cost advantage
        • Supernormal profits. P1 and Q1
        • If it was competitive then it would require subsidy. P2 and Q2
    • Natural monopoly: Where a monopolist has an overwhelming cost advantage
      • Supernormal profits. P1 and Q1
      • If it was competitive then it would require subsidy. P2 and Q2

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