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Best Practice Guide |
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Glossary |
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Best Practice Guide GlossaryBrowse the glossary alphabetically: NATURAL MONOPOLY Return to list of termsA 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 |