A natural monopoly is created when the investments in the fixed cost and infrastructural establishments are very high. It is formed when there is only one efficient firm in the market. This is because it is not feasible for all firms to incur such huge investments in establishments. Eventually, this creates barriers to the entry of new firms, and the monopolist enjoys the status of being the only seller in the market. A natural monopoly is powerful enough to exclude competitors with the high cost of entering the market. A natural monopolist can serve the market with the lowest cost because they enjoy the lowest average cost of production.