Best Practice Guide

Glossary

Introduction

Planning an Energy Program

Funding and Approval

Education

Lighting

Central HVAC System

Procurement Policy

Building Envelope

Demand Response

Distributed Generation

Water Use

Motors

Food Service

Resources and Appendices

Lessons Learned

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