What is a geographic monopoly?

A geographic monopoly refers to a market condition where a single firm dominates due to geographical barriers that limit competition. This scenario can occur in regions where the cost of entry is high or impractical for other businesses, such as remote areas with low population density or specialty services that can only be provided in specific locations.

In these cases, the firm might benefit from unique access to resources, proximity to customers, or exclusivity granted by local regulations, allowing it to maintain significant power over pricing and supply without facing direct competition. Geographic monopolies often arise in industries like utilities (water, electricity) or local services where infrastructure investment and operational scale are crucial, making it difficult for other companies to compete effectively.

The other choices present different concepts: one suggests a firm controlling the entire market, which describes a general monopoly rather than a geographic one; another refers to online marketplaces, which is unrelated; and the last mentions a government-regulated market, which does not necessarily imply that a single firm has geographic dominance. This understanding helps clarify the unique nature of geographic monopolies in business contexts.