There's no historical evidence of natural monopolies existing at the scale of cities. There are multiple American examples of decades long competition in utilit

There's no historical evidence of natural monopolies existing at the scale of cities. There are multiple American examples of decades long competition in utilities. The economic rationale for politicians to give their friends local monopolies long postdates the practice of doing so. > The Myth of Natural Monopoly > Most so-called public utilities have been granted governmental franchise monopolies because they are thought to be "natural monopolies." Put simply, a natural monopoly is said to occur when production technology, such as relatively high fixed costs, causes long-run average total costs to decline as output expands. In such industries, the theory goes, a single producer will eventually be able to produce at a lower cost than any two other producers, thereby creating a "natural" monopoly. Higher prices will result if more than one producer supplies the market. > Furthermore, competition is said to cause consumer inconvenience because of the construction of duplicative facilities, e.g., digging up the streets to put in dual gas or water lines. Avoiding such inconveniences is another reason offered for government franchise monopolies for industries with declining long-run average total costs. >It is a myth that natural monopoly theory was developed first by economists, and then used by legislators to "justify" franchise monopolies. The truth is that the monopolies were created decades before the theory was formalized by intervention-minded economists, who then used the theory as an ex post rationale for government intervention. At the time when the first government franchise monopolies were being granted, the large majority of economists understood that large-scale, capital intensive production did not lead to monopoly, but was an absolutely desirable aspect of the competitive process. http://mises-media.s3.amazonaws.com/rae9_2_3_3.pdf http://mises-media.s3.amazonaws.com/rae9_2_3_3.pdf