Natural monopoly

Okay kiddo, a natural monopoly is when a company that sells services or products has a really high cost of upfront infrastructure that can't be easily copied by competitors. This means that it is really hard for other new companies to come in and start selling the same things.

For example, think about electricity companies. They need to build a lot of things like power plants, power lines, and other big expensive things to be able to provide electricity to our homes. This all costs a lot of money, and it's not easy to get permission to build all these things in every single city.

Because of this high cost, it's really hard for new companies to come in and start selling electricity too. It just wouldn't be smart for another company to spend all that money and hassle to build their own power grid when they can't even be sure they'll make as much money as the current electricity company.

So, when a company has a natural monopoly, it means they don't have much competition and they don't have to worry about another company coming in and stealing their customers away. But this can also mean that the company can charge high prices because there's nobody else in the market to offer lower prices.

So, when a natural monopoly exists, the government usually gets involved to regulate what the company can charge for their services or products so that people won't have to pay too much.