Question

how does the concept of the natural monopoly for local utilities represent long-term cost savings for users of such services?

Answer 1

A natural monopoly arises with initial very high investments and unique raw materials that drives out the other firms from the market. It helps monopolies to achieve the economy of scale. As a result, price put upon the product is kept lower in the long run, once the firm has already recovered its investment. It makes consumers of these services to get it at lower price and save cost savings at their end. Further, the monopolist firm identifies the new innovative ways to produce and reduce the cost of operations. It transfers to the reduction in price and lower cost to the consumers. So, cost savings takes place at the end of users of such services.