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:
“Fate then is that necessity by which a certain result will surely be brought to pass according to the natural course of events however we may vary the particular circumstances which precede the event.”
—Charles Sanders Peirce (1839–1914)