Is monopoly ever justified? Why or why not?

In an ideal world, consumers are generally better served when there is competition between various industries. Competition tends to help keep prices in check and often prevents companies from charging whatever they want because there is no competition. However, there are some instances where it is justified to have the existence of monopolies.

Some industries have incredible setup costs. In these industries, it is justified to have a monopoly. Examples can be found in the...

In an ideal world, consumers are generally better served when there is competition between various industries. Competition tends to help keep prices in check and often prevents companies from charging whatever they want because there is no competition. However, there are some instances where it is justified to have the existence of monopolies.

Some industries have incredible setup costs. In these industries, it is justified to have a monopoly. Examples can be found in the electrical, natural gas, and water industries. Because the setup costs are so high for an electric company, a natural gas company, and a water utility, it would not be feasible for multiple companies to provide these services to a city or a region. In these cases, it is acceptable to have one water utility, one natural gas company, and one electric company serving a city or a region. The companies are regulated by a government agency. This prevents them from raising rates without getting permission from the government. These companies provide a very valuable service and are regulated by the government. Government regulation helps to protect the consumer from unreasonable rate increases.