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(i) Where there exists substantial economies of scale which can only be tapped by one very large enterprise.
(ii) Where the production requires heavy capital investment not affordable by many firms.
(iii) Merging or amalgamation of firms producing similar products to control the market.
(iv) Legal production through patents and copyrights.
(v) Control of important factor of production.
vi) Where transportation costs are large the relevant market may be limited geographically if
there is only one firm in such a locality. There may be no or very limited competition.
vii) In case where cost of production per unit of output declines (decreasing cost of
production or increasing returns to scale) entry into industry becomes very difficult,
thereby permitting the firms already established to exercise natural monopoly.
viii) Government owned or controlled enterprises to eliminate wasteful competition. Some monopolies are created by the government or run by the government. The Kenyan
government, for example, has given the Kenya Power and Lighting Company the
exclusive right to generate and distribute electricity in the country. Patent rights given to
some investors grant them monopoly over their invention over specified period of time.
maurice.mutuku answered the question on July 11, 2017 at 07:27
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