1.In many towns, the local gas company is considered a natural monopoly; local government officials argue that no other firm can successfully compete with it (it can produce gas at a lower average total cost than all other firms, therefore outcompeting them). Furthermore, the government officials prohibit other firms from even trying to compete with the gas company.

But why does the government need to prohibit other firms from competing with the local gas company? If the gas company really is a natural monopolist, it can outcompete all newcomers. Why does it need government protection from the competitors it can outcompete?