Monopoly sells a good or service that has no good substitute. Barrier to entry: a constraint that protects a firm from potential. Natural barrier to entry creates a natural monopoly. Natural monopoly: an industry in which economies of scale enable one firm to supply the entire market at the lowest possible cost. E. g. firms that deliver gas, water, electricity. Occurs if one firm owns a significant portion of a key resource. Legal monopoly: a market in which competition and entry are restricted by granting of a public franchise, government licence, patent, or copyright. Public franchise: an exclusive right granted to a firm to supply a good or service. Government licence: controls entry into particular occupations, professions, and industries. Patent: exclusive right granted to the inventor of a product or service. Copyright: an exclusive right granted to the author or composer of a literary, musical, dramatic, or artistic work. To sell a larger quantity, the monopoly must set a lower price.