Introduction
A natural monopoly differs from a market monopoly in that it is often protected and regulated by the government. This is because governments assume that a natural monopoly benefits society. One of the most common natural monopolies is the Information and Communication Technologies (ICT) industry. Almost all communications and IT purchases are now made through a single provider. Consumers have no choice between different suppliers, so this market is recognized as a natural monopoly.
Discussion
ICT monopoly is due to the limited number of manufacturers or service providers and the high costs of entry into this sector. In addition, most ICT manufacturers and service providers need help with significant investments in new technologies and the need for a long time to reach some stability in the business (Demestichas & Daskalakis, 2020). Monopoly power in the ICT sector manifests itself in customers not havingneed more choices of manufacturers and service providers. This means that manufacturers and service providers can make offers that could disadvantage consumers. Monopoly power can lead to inefficient resource allocation and slow technological progress.
The government prefers to regulate natural monopolies rather than prohibit them, as they benefit society. In particular, since high investments and access to new technologies are essential for target consumers, the regulation provides access to these resources. However, regulation raises specific ethical issues (Audi & Ali, 2019). In particular, if the government sets prices, it can lead to some consumers paying more than they should. To structure the regulation of the natural ICT monopoly so that the interests of producers and consumers are considered, the government can set rules for producers and service providers, such as mandatory investments and taxes (Audi & Ali, 2019). This will help manufacturers and assistance providers to balance their interests and the interests of consumers. At the same time, the government should ensure that the prices of ICT services and products are adequate and are regularly monitored to prevent unfair practices.
Conclusion
In conclusion, the natural monopoly in the ICT industry is a complex phenomenon with many features similar to market trust. Such features include high entry costs, high market concentration, and low productivity. It thus helps to understand why Governments seek to protect and regulate natural monopolies to maximize the benefits to society.
References
Audi, M., & Ali, A. (2019). The Advancement in Information and Communication Technologies (ICT) and Economic Development: A Panel Analysis. Munich Personal RePEc Archive. Web.
Demestichas, K., & Daskalakis, E. (2020). Information and Communication Technology Solutions for the Circular Economy. Sustainability, 12(18), 7272. Web.