A column on bloomberg.com argues that natural gas pipelines are a natural monopoly. Almost all of the
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A column on bloomberg.com argues that natural gas pipelines “are a natural monopoly. Almost all of the costs are the fixed ones involved in building them; as long as there’s spare capacity, the incremental expense of moving an extra cubic meter of gas down the line is infinitesimal.” Briefly explain why the cost structure of pipelines as the columnist describes it makes pipelines a natural monopoly. Be sure to define “natural monopoly” in your answer.
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