• coltorl@programming.dev
    link
    fedilink
    English
    arrow-up
    13
    ·
    edit-2
    1 year ago

    A natural monopoly is when an industry is difficult to break into, making competition difficult or impossible. This favors incumbents, in fact, a lot of industries are natural monopolies (pharma, aerospace, chip production).

    The difficulty of breaking into an industry may be because:

    • new players cannot compete with established scale
    • start up costs require a nearly all-or-nothing approach, high risk
    • regulations tie the hand of new innovators