Privatizing a State Run Natural Monopoly

In natural monopoly economics, nature monopoly can be defined as the fact that the second company enters the unprofitable industry and competes because the fixed cost of capital goods is very high. The reason is that due to the nature of the product or service, a single supplier is more efficient than several competing suppliers. The purpose of this paper is to discuss whether the economic argument that supports and opposes national privatization is natural monopoly. You will learn about:

18 Natural Monopoly: An industry is a natural monopoly when the producer's production can be more efficiently accomplished by one producer than several producers. Natural monopoly often occurs in industries with large economies such as utilities and industries that require large capital investment in production, such as industries that require large capital investment. D Q 70 40 1 4 8 France wants to construct eight new nuclear power plants. The government should decide on the basis of hiring a company to build all eight factories (thereby making the company monopolize) or a long-term ATC curve (representing the cost per plant in the factory) .

Government regulation may be desirable if the industry is a natural monopoly to protect the public from monopolistic corporate behavior. However, Weidenbaum (1995) argues that natural monopoly is "natural" in a given technical or economic environment. In other words, today's monopoly may become a competitive industry tomorrow (for example, the US railway is currently competing with cargo shipping and barge carrying goods). In addition, due to technology and market changes, new space for service competition once considered monopoly was born (World Development Report, 1997). For example, power generation and transmission, postal service, airline, telecommunications etc. Therefore, the government can simply provide appropriate incentives to attract the private sector to accept services provided by the government in the past.

Department of Administrative Development and Management, Department of Economic and Social Affairs