MANAGEMENT

Detailed explanation-1: -Natural gas, electricity companies, and other utility companies are examples of natural monopolies. They exist as monopolies because the cost to enter the industry is high and new entrants are unable to provide the same services at lower prices and in quantities comparable to the existing firm.

Detailed explanation-2: -The case of tap water can be an example of a natural monopoly. It makes sense to have only one company providing a network of water pipes and sewers because the setting up of a national network of pipes and sewage systems entails very high capital costs.

Detailed explanation-3: -A generally-held view is that the water sector has a high degree of natural monopoly and that introducing competition in the market would be inefficient, although some economists have made the case for competition in wholesale supply of water (Kessides 2004, Stern 2009).