Economies of Scope - Natural Monopolies

Natural Monopolies

While in the single-output case, economies of scale are a sufficient condition for the verification of a natural monopoly, in the multi-output case, they are neither necessary nor sufficient. Economies of scope are, however, a necessary condition.

As a matter of simplification, it is generally accepted that, should economies of scale and of scope both apply, as well as sunk costs or other entry barriers, then markets may have monopoly features.

Read more about this topic:  Economies Of Scope

Famous quotes containing the word natural:

    It is a mass language only in the same sense that its baseball slang is born of baseball players. That is, it is a language which is being molded by writers to do delicate things and yet be within the grasp of superficially educated people. It is not a natural growth, much as its proletarian writers would like to think so. But compared with it at its best, English has reached the Alexandrian stage of formalism and decay.
    Raymond Chandler (1888–1959)