Question

Discuss the effects of technological change on the elimination of natural monopolies

Answer 1

Technological innovation would diminish the monopoly control of the current monopolist. As technology advances and is either available to other firms or created by other firms, the surplus benefit produced by the monopolist in the short and long term would be gained by charging a price higher than competitive price.

Developing new technologies may often ruin a natural monopoly. A new invention will cut down on fixed costs and make small companies as effective as a single big business.