When a firm's average total cost curve continually declines, the firm is a natural monopoly.

A natural monopoly is a market structure with a single seller, where the cost of producing output declines as more is produced. Therefore, the efficiency of producing a given output using one firm is higher compared to splitting the output among more firms. This occurs when the production process has a fixed cost and a constant marginal cost, so the average total cost declines continuously with output. The monopoly that arises in this situation is known as a natural monopoly.