Why did public enterprises form a monopoly tradition?

Natural monopoly industries mainly refer to economic sectors that have an exclusive monopoly market structure due to weak cost growth. They mainly refer to public enterprises, often network and infrastructure industries. The so-called public enterprises refer to businesses or industries that provide products and services to the public or are used by the public, such as postal services, telecommunications, power supply, water supply, gas supply, heating supply, and public transportation. In the "Several Provisions on Prohibiting Behaviors Restricting Competition by Public Utility Enterprises" issued by the State Administration for Industry and Commerce of my country, public enterprises are defined as public utilities or industries such as water supply, power supply, heating, gas supply, postal services, telecommunications, and transportation. of operators.

Natural monopoly is determined by product characteristics, and its inherent basis is the principle of economies of scale. Economies of scale mean that within a certain range of output, the production function shows increasing returns to scale. The larger the scale of the enterprise, the lower the cost of the unit product. Large-scale production by one enterprise is more efficient than simultaneous production by several small-scale enterprises. Efficient; natural monopoly means that the total cost of a company producing a certain number of products is lower than the total cost of two or more companies producing the same number of products simultaneously. As the number of operating companies increases, the unit product cost increases.

The products and services of public enterprises are often provided through wired or wireless, pipeline, highway, railway and other networks. Network construction is expensive and time-consuming. It is difficult to build the same network repeatedly to carry out parallel competition, so it has a natural monopoly characteristics. Natural monopoly puts public enterprises in a monopoly or oligopoly market. In addition, the demand elasticity of products and services is small. Enterprises in a monopoly position will raise prices to seek greater profits, while oligopoly enterprises have a tendency to collude to raise prices. Therefore, since the large-scale development of public utilities began at the end of the 19th century, there has been no effective competition mechanism in their operations for a long period of time, and the "Anti-Monopoly Law" has included them in the scope of exceptions.