A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry—that is, other companies cannot enter the market to create competition in that particular industry.
Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario.
Barriers to Entry
Exclusive Government- Economies
Ownership of a Created of Scale
Key Resource Monopolies
Scenario
The Aluminum Company of America (Alcoa) formerly controlled all U.S. sources of bauxite, a key component in the production of aluminum. Given that Alcoa did not sell bauxite to any other companies, Alcoa was a monopolist in the U.S. aluminum industry from the late 19th century until the 1940s.
In order to own and operate a taxi, drivers are required to obtain a taxi medallion.
In the natural gas industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary pipes and hoses makes it risky and, most likely, unprofitable for competitors to enter the market.

Alcoa controls the sources of bauxite which is a key resource in the production of aluminium. Alcoa doesn't sell bauxite to other firms and so was able to retain monopoly power. This is an example of how ownership of a key resource leads to a monopoly.

The government requires drivers to obtain a tax medallion. This is an example of exclusive government created monopolies.

Economies of scale occurs when cost of production falls when a firm operates on a large scale. In the natural gas industry, low average cost can only be achieved through large scale production: this is economies of scale.