Natural monopoly : Natural monopoly is the monopoly that exist in an industry when the most efficient number of firms in the industry is one. Infrastructure projects are characterised with the unique economic characteristic of natural monopoly where it is most efficient for a single supplier/operator to offer the infrastructure services. It is not practical to create a competitive market for an infrastructure service (e.g. water supplies) by encouraging several private players to build its own network (e.g. separate reservoir and pipeline to customers). High barriers to market entry, economies of scale, and inelastic demand are the reasons why it is most efficient for a single supplier to offer the services. High barriers of market entry refer to high sunk costs of infrastructure projects and long time period required for construction and in up-grading the facilities. Economies of scale refer to the fact that an infrastructure service average cost per unit falls as size of the infrastructure project is increased. Infrastructure provides basic services and goods in addition to maintaining a comparatively constant demand even during price variation.

High-upfront costs : Infrastructure projects are characterised with very high upfront capital investment made to build the facilities. However, the expenditures incurred towards the operation and maintenance of the facilities once it enter the operation phase after commissioning of the constructed facilities is very low in comparison with the upfront capital investment.

Non-tradability of output : The products and services provided by an infrastructure project (such as water supplies, transportation, and waste disposal with the possible exception of power) can only be used in the economy where they are produced. These services can neither be exported nor imported.

Non-rivalness in consumption : The consumption of the infrastructure service by one individual does not reduce the benefits derived by all other individuals. This means that benefit of infrastructure services can be extended to additional consumers without any huge additional cost.

Presence of externalities : Infrastructure projects can generate benefits even for users which are not directly consuming the services provided by the infrastructure projects. For example, development of a metro network not only allows people to travel, but also reduces congestion that leads to less pollution and deaths due to accident.