Why are public utilities sometimes regulated monopolies?

• A. Because utilities are public goods that require a single provider to guarantee universal access and prevent free-riding.
• B. Because governments typically nationalize utilities and legally forbid competition to retain political control over essential services.
• C. Because banning competition is necessary to encourage firms to innovate and invest in new technology for better service.
• D. Because they are natural monopolies—high fixed costs and economies of scale make a single provider most efficient, so the government allows one firm but regulates prices and service.

Answer: (D)