The Cost of Competition under Natural Monopoly Conditions

One of the most interesting and difficult applications of the theory of monopolies is to the question whether the public interest is best served by the allotment of a distinct basin to each great railway, and excluding competition there. For the proposal it is urged that a railway can afford to carry two million passengers, or tons of goods, cheaper than one million: and that a division of the public demand between two lines will prevent either of them from offering a cheap service (Alfred Marshall, Principles of Economics, 8th Edition, 1920, BK. V, Ch. XIV, p. 485).