Question

Discuss some examples of local markets which are "monopolized." Is this type of monopoly good or bad? What are your thoughts. (Note: Most monopolies are found on the local level.) Requirements: Discussion should be at least 4 full sentences. Responses

Answer 1

Most of the local monopolies are related to electricity utility, postal service, water utility services that are able to cater a large section of society. Hence, they face a continuously falling average cost. These are typically natural monopolies but sometimes government legally allow them to operate with no competition allowed in their operations. For regulations, government can impose a fair pricing rule forcing them to charge the average cost only. Otherwise the government can implement a marginal cost pricng rule, resulting in huge losses for the monopolist to survive. This scheme is therefore unsustainable. These monopolies are good but only when they are regulated as they are capable of catering a large section of people.