Another advantage of a natural monopoly is that, as output increases, average costs will fall, offering the prospect of substantial benefits to be gained from economies of scale as costs will get spread out more over a larger amount of output due to the relatively small marginal cost and high fixed costs.
A natural monopoly is a type of monopoly that exists due to the high fixed or start-up costs of conducting a business in a specific industry. Additionally, natural monopolies can arise in industries that require unique raw materials, technology or similar factors to operate.
