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:
“The home is a woman’s natural background.... From the beginning I tried to have the policy of the store reflect as nearly as it was possible in the commercial world, those standards of comfort and grace which are apparent in a lovely home.”
—Hortense Odlum (1892–?)