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To: dumbmoney who wrote (19708)	5/27/1998 1:23:00 AM
From: Gerald R. Lampton	Read Replies (1) \| Respond to of 24154

But the real clincher is economies of scale. Unlike manufacturered goods, there is no limit to the economies of scale - every additional copy sold reduces the effective production cost of all of them. Although economies of scale are important, the slope of the curve still flattens as it approaches zero. In any event, though not every industry with large economies of scale is a natural monopoly, every natural monopolist has huge economies of scale in relation to the market it serves. The real question is: can more than one company produce efficiently in the PC OS market, or will competition inevitably drive the number of competitors down to one, which will restrict output and sell at above competitive prices? If the later, it's a natural monopoly.