Local electric or gas utility companies mostly operate in which market structure?
– pure competition
– monopolistic competition
– pure monopoly
The third option , pure monopoly is the correct answer.
Pure monopoly refer to the market structure whereby one fi9rm is the single source for a particular product. And there will be no close substitutes for the product. Other than local gas and electric entity companies there is no other firms supplying the same in the locality. Thus this is an example of pure monopoly. The entry of other companies into this market is strictly prohibited. The firms which exist in the market have the complete control over the price. Thus it can be said that the local electricc and gas ulity firms are the perfect examples of pure monopoly.