The chapter then briefly discussed the phenomenon called “X-inefficiency”. This describes the situation when a monopoly does not achieve the minimum costs that are technically feasible. This is also known as cost inefficiency, operating inefficiency, or productive inefficiency.
In summary, natural monopoly inherently involves the problem of undersupply by the market. The extent of undersupply depends on the particular cost-and-demand conditions facing the monopolist and the extent to which the market can be contested. Natural monopoly may involve additional social surplus losses because the absence of competition permits production at greater than minimum cost to persist.