In practice - Inpractice,.Forinstance, , profit,.

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In practice, pure monopolies are very rare. For instance, a supermarket may be the only  food supplier in a particular town, but if it raises its prices and retains too much of a  profit, a competitor may enter the space. Even the threat of serious competition entering  the market forces the existing firm to act conscionably, and differently from how it would  act otherwise. A train company may be the only carrier in a particular station, but if cars  are also available in the area, there exists a close substitute to the output good.  Natural Monopoly  A natural monopoly is a firm with such extreme economies of scale that once it begins  creating a certain level of output, it can produce more at a far lower cost than any  smaller competitor. Natural monopolies exist far more frequently than pure monopolies,  mainly because the requirements are not as stringent. 
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This note was uploaded on 12/13/2011 for the course ECO 1320 taught by Professor Staff during the Fall '11 term at Texas State.

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In practice - Inpractice,.Forinstance, , profit,.

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