Back to Assignment Keep the Highest 0 l 1 1. Sources of monopoly power A monopoly, unlike a perfecljy competitive firm, has some market power. Thus, it can raise its price, within limits, wllout quantity demanded falling to zero. The main way monopolies retain their market power is through barriers to entry, which prevent other companies from entering MOHODDI'ZEd markets and competing for wstomers. Consider the market for natural gas. In this Industry, low average total costs are obtained only through largescale production. In other words, the initial cost of setting up all the necessary wells, tanks, and pipelines makes it risky and most likely unprotable for a competitor to enter the market. which of the following best explains the barriers to entry that exist in this scenario? 0 Legal barriers 0 Control over an Important input 0 Increasing returns to scale