Best Practice Guide

Glossary

Introduction

Planning an Energy Program

Funding and Approval

Commissioning

On-the-Farm Energy Use

Lighting

Building Envelope

Central HVAC System

Boilers

Steam

Combined Heat and Power

Compressed Air

Refrigeration

Motors

Demand Response

Distributed Generation

Water Use

Best Practice Guide Glossary

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NATURAL MONOPOLY Return to list of terms

A situation where one firm can produce a given level of output at a lower total cost than can any combination of multiple firms. Natural monopolies occur in industries that exhibit decreasing average long-run costs due to size (economies of scale). According to economic theory, a public monopoly governed by regulation is justified when an industry exhibits natural monopoly characteristics.

Source: California Energy Commission