X-Inefficiency Resulting from Limited Competition Thus far we have described the potential social costs of natural monopoly whether it prices to either maximize profits or cover cost, in terms of deadweight loss caused by allocational inefficiency. The social costs, however, may be larger because natural monopolies do not face as strong incentives as competitive firms to operate at minimum cost. One of the greatest advantages of a competitive mar ket is that it forces firms to keep their costs down other words, whole av erage and marginal cost curves are as low as they can possibly be. In the absence of competition, firms may be able to survive without operating at minimum cost Harvey Leibenstein coined the phrase inefficiency to describe the situation in which a monopoly does not achieve the minimum costs that are technically feasi ble.30 (As we shall see, X-inefficiency is not fully descriptive because transfers as well as technical inefficiencies are often involved.) One also sometimes finds the terms cost ineficiency, operating inefficiency, or productive efficiency to describe the same in phenomenon.