Naturel menepolies and regulation

Natural monopolistic characteristics of the industry is one of the reasons causing the market failure. Expected functions of competition will not be well performed due to industry's having natural monopolistic properties. Therefore, it is inevitable to interfere to them. In this sense, regulation authorities having been established to regulate natural monopolies using means of intervention has great importance to reach expected results or close to that. The main purpose of this study is not only to find out which tools could be used and outcomes of their usage while regulating natural monopolistic industries or firms, but also to put forward how appropriate those so-called regulation methods fits society benefits by their usage. In parallel to these purposes, we also analyze the following methods used in the regulation of natural monopolies: Marginal and Average Cost Pricing, Rate of Return Regulation, Price-cap or RPI-X Regulation, Ramsey Pricing, Two-Parts Tariffs, and Peak-Load Pricing. Moreover, we present the possible consequences of these methods for social welfare with a harmonized mathematical exposition. Key words: Natural monopolies, Regulating Natural Monopolies, Social Welfare