activity highly competitive. Canada Post still has a legislated monopoly
over delivery of first-class mail, but this segment of the overall delivery
market is now much smaller than it once was. These changes in the
delivery market have forced Canada Post to actively compete against UPS
and FedEx, largely for the delivery of online purchases.
Other examples of industries that used to be natural monopolies but are
now much more competitive include airlines, long-distance telephone
service, and the generation of electricity (the distribution of electricity
continues to be a natural monopoly).
The case of electricity is particularly interesting. The combined
production and distribution of electricity was once viewed as a natural
monopoly, and the policy response was either to establish publicly owned
power authorities (as happened in Canadian provinces) or to regulate
privately owned power companies (as occurred in the United States). The
source of the natural monopoly was twofold. First, the generation of
electricity at low unit cost required large and expensive generating
stations. Second, the transmission of power required the establishment of
power grids, with networks of wires running from the generating stations
to the users.
In recent years, however, the technology of electricity generation has
changed dramatically. Though nuclear and hydro stations are still very
expensive to build, it is now possible to build small and relatively
inexpensive natural gas–powered generating stations that produce
electricity at low unit costs. In addition, it is now common to have small