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True, One of the criteria that distinguishes a natural monopoly is a declining average total cost with greater production. If one company can serve a market more affordably than any combination of two or more enterprises, then that market has a natural monopoly.
A natural monopoly is one in which the largest supplier in the industry, frequently the first supplier in a market, enjoys a significant competitive advantage over potential rivals due to high infrastructure costs and other entry obstacles in relation to the size of the market. A particular industry qualifies as a natural monopoly if the overall cost of one company generating the full output is less than the total cost of two or more companies doing the same. In that situation, it is quite likely that one company (a monopoly) or a small number of businesses (an oligopoly) will emerge and offer all or the majority of the pertinent goods and/or services. This usually happens in sectors where capital costs are high, resulting in significant market-size economies of scale; examples include public utilities like water, electricity, telephones, and mail services. As early as the 19th century, natural monopolies were identified as potential drivers of market failure; John Stuart Mill favored government regulation to make them serve the general welfare.
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