Another type of natural monopoly happens when accompany takes control of a scarce physical resource. An example of the majority of global diamond production is controlled by DeBeers, which is a global company located in South Africa has exploration activities on four continents. It also directing a worldwide distribution network of rough diamonds. However, some expert study on the natural gas industry in Canada and America, they find that within the past decades, America and Canada have deregulation of the natural gas industry. The problem of the efficiency and cost, and the study purpose to find out is it possible to investigate whether cost savings could be achieved in transporting natural gas by allowing a multi-firm configuration of the …show more content…
In order to take control of economic fluctuations, the government mainly use following three methods to intervenes: the first is through taxation, the second is by regulate conditions of monopoly due to natural and regulated monopolies, and the last one is by using anti-monopoly laws and policies to candidly prevent unfair price discrimination amongst different consumers. However, the government should not regulate the market power in the same degree, while the market power not only exist in monopoly market, but also exist in another two market structures include oligopoly and monopolistic competition. Those three structures have varying degree of market power. The degree of government intervene depends on different industries and market structures.
The first structure is monopolistic competition. A large number of small companies compete against each other. Product and service are different but not perfect substitutes and all the producer are price maker. This kind of market power will no longer result in a socially optimal level of output and have limited market power. An example of monopolistic competition is the market for