Utilities and more what is a Natural Monopoly

A natural monopoly will arise whenever a company that is in production of goods and service possesses all the necessary equipment to carry out its goal of making a large profit. With so many businesses in a market competing for more profits, it is no wonder that various companies are becoming monopolies. Since there is a lot of capital needed to meet demands, many businesses lack the opportunity to excel.   

Sometimes monopolies are formed by utility companies due to a number of issues that make it difficult to carry out operational tasks. For example, things like lack of capital, equipment, and labor make monopolies more economical. With one company functioning in an area owning power lines, generators, pipes, and repair equipment used to provide electricity and gas, there will be a competitive edge already obtained by that company. It does not matter what type business a company is operating; as long as that organization has almost complete control over the market, it is said that a monopoly is established.  

To build proper facilities on large enough land might be too expensive for some businesses. In addition, the cost of providing gas and electricity to an area might prove enormous for competitors as well. Hence, companies with huge amounts of capital undertake to provide such necessary services to the public. People are usually dependent on the authorities of a country or city to provide proper water and sewage for their uses. With the authorities firmly in control of water and sewage, it becomes an impossible task financially as well as environmentally unfeasible to build new structures to carry out such needs.

In a monopoly, consumers tend to be the ones who suffer the most. This is because there is no strong competition that will compete against a company practicing monopoly. This leads to the provider of such services often taking advantage of citizens by selling their products expensively. To keep a company in check, the government often restricts a monopolistic company from charging too much. Government bodies are forced to set guidelines and safety measures and the company is required to operate in them. In addition, the company is required to produce reasonable proof as to why an increase should be granted.            

Natural monopolies come about mainly because a government allows it to happen. However, with citizens and opposition parties constantly opposing such moves, a company will not always have the market to themselves easily. Each government must see to it that the citizens they govern are well protected from the companies that would monopolize the market.